Is Randall's Grocery Stores Going To Go Away?

[west20th]

I've heard rumors that Fiesta will be taking over the Randall's space at Shepherd and Westheimer. Anyone know if there is anything to that?

[august948]

I was in the Wilcrest Randalls the other day. The pharmacy is already closed. No store closing sale yet. There were very few customers at 9:30 PM. I have definitely seen more customers in the San Felipe and Westheimer/Gessner stores at 9:30. Even the store in Stafford, which is probably the last remaining Randalls store in a "poorer" part of town, still does good business, tons of people there buying gas all the time.

 

They even had the fake doctor's office put in at the Wilcrest store, but it looked like they went in there and stripped it out. I don't know if anyone else has noticed the little clinics they put in all the Randalls - some of them have been in for 3 years now, but they have never been used or staffed. Even the tiny Bellaire store has one, with pamphlets and everything.

 

Those are primarily used for the shots the pharmacists give.

 

[IronTiger]

Correct. What is happening over time is that the grocery market seems to be gradually bifurcating into higher-priced niche marketers (Sprouts, Whole Foods, Trader Joe's) and discounters (Walmart, Aldi, dollar stores). Consequently it is getting increasingly tough for the traditional mid-market stores (Kroger, HEB, Randalls) to compete. Those that can't stay on top of their game won't last in the long run. Think of it as the food equivalent of what happened to old mid-line retailers like Sears and JCPenney.

Not really sure about that. While it's definitely true for main retailers, the grocery market isn't quite so clear. One of the reasons grocery stores seem to be getting smaller is that Houston real estate isn't especially cheap. The Montrose H-E-B isn't one of their largest stores, but it's a reasonable size and certainly larger than the Fiesta it functionally replaced. Walmart opened a 150k square feet store inside the Loop a year or two ago, and in the suburbs, the H-E-B in Fairfield is 100,000 square feet.

Remember, two decades ago, Food Lion and H-E-B Pantry came in with tiny stores. H-E-B grew bigger (both in market share and store size) and Food Lion disappeared. Kroger and Randalls lived through it. So did Fiesta. Rice too, though it began to shrink. AppleTree wasn't strong enough to compete in the price war and failed.

[MikeRichardson]

Those are primarily used for the shots the pharmacists give.

 

 

 

That's it though? There seems to be in each clinic, a waiting room, and one or two exam rooms. It's built out like an HEB RediClinic or CVS Minute Clinic.

 

Sam's Club gives out shots, but they just have a cubicle wall partition near the pharmacy where they go to give out the shots. Seems like the Randalls "clinics" were destined for something more, but for some reason were never fully realized.

[IronTiger]

So apparently, Albertsons' parent company is in talks to buy Safeway (one link). Given that a lot of their markets overlap in several areas, including both Dallas and California, it would be interesting to see what happens next. I think that's still a bit of an odd concept with Albertsons returning to Houston area wearing the Randalls name (similar to Safeway and Randalls in '98). It's more than likely that Randalls will be driven out for good around the time of that happening.

[plumber2]

Correct.  What is happening over time is that the grocery market seems to be gradually bifurcating into higher-priced niche marketers (Sprouts, Whole Foods, Trader Joe's) and discounters (Walmart, Aldi, dollar stores).  Consequently it is getting increasingly tough for the traditional mid-market stores (Kroger, HEB, Randalls) to compete.  Those that can't stay on top of their game won't last in the long run.  Think of it as the food equivalent of what happened to old mid-line retailers like Sears and JCPenney.  

There are some people like me that will never shop at a Whole Foods are a Trader Joes'. Just ain't happening. The market will balance out and shift around, but Krogers and HEB will not be going away.

[IronTiger]

The market will balance out and shift around, but Krogers and HEB will not be going away.

Now, it may be just my perception, but I have a feeling that Safeway/Randalls did not adjust to the local neighborhoods it inhabited nearly as well as Kroger or H-E-B.

[IronTiger]

Apparently the rumor now is that Kroger will buy up Randalls. It would certainly give them strength in some markets (San Francisco, Washington DC) that they had little to no presence before but would muck around with others (like Ralphs in LA, or Randalls in Houston—although the market gain from the stores probably wouldn't be very much)

[Slick Vik]

Randall's has always been more expensive to me, because there was one walking distance from my parent's house and it was always higher than Kroger, and significantly higher than Fiesta and HEB. Good riddance.

[IronTiger]

It would really depend on the market. In Houston, I could imagine Kroger closing and rebranding some, ending the name here, but say, for Austin, them to continue operating under the name and give HEB a run for its money. In Dallas, it may end up providing an entrance of HEB into the area.

[Marcus Allen]

I never liked shopping at Randall's in the past because it consciously did not sell beer or wine for years. It was almost like the owners were trying to force their morality on the shopping public. I even remember one of the companies that I worked for back then made sure to hand out "Randalls" gift cards at christmas time to it's employees, thinking that they were doing us some kind of favor by not allowing us to spend the card on beer! I would always give my gift card away anyway, usually to one of the apprentices'.

So for that reason alone I never made Randalls one of my grocery shopping choices.

However, I did go to the one in Galveston yesterday to get soft drinks, and their prices were competive. The store was clean, fully stocked with all of the choices that Kroger or HEB have. Not sure why they are having trouble these days because this store looked fine to me.

[Marcus Allen]

Plumber2, I think it was that way because of the Safeway domination of the store. Safeway was at one time owned by Mormons who, of course, preached against alcohol, tobacco and even caffein at one time. Perhaps that is the reason.

[Naviguessor]

^^ Among other things...and people.  Until they needed these things...or the money they bring.  

 

But, I thought it was Randall's that what Mormon.  Not Safeway.  

[mollusk]

My understanding was that the Onsteads (sp?) (the family that started Randall's) are practicing Baptists - another group known for not exactly being  publicly fond of hooch.

[plumber2]

Just heard that Albertson's is buying Safeway. How the worm does turn.

[IronTiger]

Just heard that Albertson's is buying Safeway. How the worm does turn.

Wow, it went through! So, just like how Safeway got itself back into Houston by buying Randalls, Albertsons is getting back by buying Safeway. Go figure.

[august948]

My understanding was that the Onsteads (sp?) (the family that started Randall's) are practicing Baptists - another group known for not exactly being  publicly fond of hooch.

 

Having been raised as a Baptist and having attended the largest Baptist university in the world I can tell you that a lot of Baptists are privately fond of hooch.

 

[Naviguessor]

Worked as a Bell Captain, in San Antonio, in late 80's. The national Southern.' Baptists were in town. Those bags were all heavy... and rattled a lot!

[Subdude]

Just heard that Albertson's is buying Safeway. How the worm does turn.

 

Albertson's isn't buying Safeway.  The hedge fund that owns Albertson's bought Safeway and will merge the two brands.

[IronTiger]

Albertson's isn't buying Safeway.  The hedge fund that owns Albertson's bought Safeway and will merge the two brands.

I'm not sure how Cerberus will combine all the brands: from the press report, the two Albertsons Inc. "baby companies", Albertsons LLC and New Albertsons Inc., haven't combined into one yet. Albertsons always seemed too expensive for a somewhat sub-par supermarket, but I guess with Tom Thumb/Randalls/et. al. seeming too expensive too, then I guess it would all even out. One wonders how they'll combine in areas with market overlap--since the Albertsons name seems to have been shrinking in Dallas-Fort Worth (at least that's my perception), they'll probably convert everything over to Tom Thumb...in stronger Safeway markets (California, Arizona, etc.) the Albertsons name will also probably vanish.

[Subdude]

One would think they could keep the brands in whichever sub-market they are strong, while creating savings by merging purchasing, transportation, back office functions etc.  That would be a typical hedge fund play.

[IronTiger]

Well, merging didn't work out all that well for Sears and Kmart, but that could be mostly attributed to some awful management and not necessarily overlap. If Randalls packs up, then it could mean more in-fill by what's here through renovations or rebuilds (Fiesta, Kroger, Whole Foods, Trader Joe's, HEB, the GSC independents). What's interesting is going to be the DFW grocery market since there's Kroger, Tom Thumb, Walmart Neighborhood Market, and Albertsons already. Increased rumblings that H-E-B is coming (they own several sites and approved rezoning for some) will likely lead to a surprise blitz of H-E-B locations in and around Dallas.

[mollusk]

Having been raised as a Baptist and having attended the largest Baptist university in the world I can tell you that a lot of Baptists are privately fond of hooch.

 

 

Ya don't say.

 

Reminds me of the old joke about Baptist sex.

[plumber2]

One would think they could keep the brands in whichever sub-market they are strong, while creating savings by merging purchasing, transportation, back office functions etc.  That would be a typical hedge fund play.

 

I hate hedge funds. Really, why can't they just leave regular companies alone? Go invest in gold or pork bellies like they're supposed to do. And don't tell me that they even things out by taking some of the risk out of the markets. That's a bunch of hooey.

[mollusk]

^^ Like anything else, IMHO it depends on who's driving the bus.  Randall's actually did pretty OK under KKR; though Cerberus seems to follow the Bain method a bit more.

[IronTiger]

KKR destroyed Schwegmann and Bruno's, two Southern supermarkets that I would've loved to see stick around more. Currently, Cerberus owns a company called AB Acquisition LLC, which originally owned Albertsons LLC, formerly Albertsons Inc. before their split. Not too long ago, AB Acquisition bought New Albertsons Inc., which was other Albertsons and other names that Albertsons had, that had gone to SuperValu. Briefly to differentiate between what SuperValu had and what Cerberus had, the Cerberus stores went under "Albertsons Market" until they merged back and that name disappeared after New Albertsons was acquired. Then AB Acquisition has bought Safeway Inc., putting the three under the banner of AB Acquisition. Once the deal closes, AB Acquisition will likely absorb all three and change its name to something like "Safeway Albertsons Inc." or even "Safeway Inc." again. As time goes on, the new company may start to partially buy itself back from Cerberus and start consolidating brand names and stores. Some stores in California where Albertsons and Safeway co-exist may be sold, and it's possible that the Albertsons name will exit DFW with those stores being rebranded as Tom Thumb. Store brands will likely be cut, and new prototypes could be created (the "Lifestyle" format by Safeway is getting rather dated now). Perhaps they could also engineer a "Plus" sized format as well with general merchandise, or market to locals better (though historically, both did neither).

What I can't predict is what will happen to the Randalls distribution center, if it will get busier with the influx of Albertsons to the east and to the north, or if it will fold and consolidate with others.

[IronTiger]

Today, Randall Onstead leads the combined BI-LO/Winn-Dixie chain, which he took about a year ago.

Q: Is there any chance you will bring Bi-Lo or Winn-Dixie stores to Houston or other parts of Texas?

A: I'd be the last person to say we'll never move into other states, but we've still got a lot of growth within our existing footprint. But who knows? We're close to Texas now. We have stores in Louisiana.

Between the improving status of Winn-Dixie (their store remodels actually look pretty good), and their closeness to Texas, if the chain wanted to move into Texas by buying back the Houston Randalls, I think they could. It would be a great way to reunite Randalls back to the original ownership (sorta) and make a bigger chain. While Albertsons/Safeway could probably part with the Houston market, it would be a pretty large leap to bring Randalls to the forefront, seeing as Randalls has lost so much ground in the competition, and "bought by Winn-Dixie" still doesn't exactly inspire confidence.

[ernie5823]

Up until a few years ago, Winn Dixie was pretty big in the Atlanta area - not as nice as Publix, or as cheap as Wal Mart. One or two that I know of converted to Bi Lo & others closed up completely. Still a couple Bi Lo stores in small town north GA, but none of either in Atlanta metro, as near as I can tell. Doesn't seem like this is a thriving chain.

[IronTiger]

The article posted was before the BI-LO merger but after the bankruptcy. The 2005 closures in Atlanta were under bankruptcy, and by that time, they had pulled out of the major Texas markets (not Houston, I've found, but they had stores in Waco, Bryan, and a collection in Dallas-Fort Worth), and that was after a bunch had been closed.

[IronTiger]

See, Cerberus SAID they wouldn't do anything with the markets or brands for now (consolidating brands, etc.) but I must note some facts:

 

- The closest Albertsons pre-Safeway merger post-2011 was Baton Rouge and Dallas-Fort Worth, 260 and 230 miles away, respectively. These are both part of the Dallas-Fort Worth.

- United is a subsidiary of Albertsons LLC, which has stores in Plano now. Because of Albertsons ownership, they had to close a few stores.

- Swamplot reported that the entire Houston division of Randalls was laid off, but IF that's true, then Safeway's Dallas division operated (pre-merger) the Dallas Tom Thumb stores, the Austin Randalls, and the Houston Randalls.

- Apparently in 2011, the D-FW division (which includes BR) closed enough stores to make money. A new store in Denham Springs, LA opened in 2011, but there there's no Kroger or HEB to worry about.

 

I can easily see AB Acquisitions (Albertsons + Safeway) consolidating the Safeway and Albertsons divisions in Dallas, but I'm wondering that since it's not Safeway in control of the wheel anymore (which had just killed Dominick's and was fast driving Randalls into a pit), what's the next plan? Would they open any Randalls, or even introduce the Albertsons name back into Houston since the Randalls name has been so tainted? 

 

Or would they try to sell it off to a buyer like BI-LO/Winn-Dixie? It seems it would be more advantegeous to keep it--the Randalls distribution center could take over for the Louisiana stores...