Lidl
Lidl appears to have recognized that its initial U.S. expansion plans may have been overly ambitious. In a recent interview, Klaus Gehrig, head of the Schwarz Group that owns Lidl, acknowledged the challenges in the U.S. market including poor site selection, building stores too large, and underestimating the competitive response of U.S. grocers. To date, the Company has opened 48 stores on the east coast, from New Jersey to Georgia. While management had previously indicated plans to have at least 100 stores open by this summer, it has now indicated it would open just 20 more in 2018 and that there will be “no more forecasts about future numbers of stores.” The Company also halted projects in Virginia, Pennsylvania, Ohio and New Jersey. Management confirmed that in addition to targeting smaller locations in higher traffic areas the Company will look to lease locations instead of owning. At about 36,000 square feet, Lidl’s U.S. stores are larger than its European stores and Aldi’s U.S. stores. The Company is now looking for sites between 15,000 and 25,000 square feet. With a smaller footprint, the Company would also need to make changes in product assortment.
Amazon
After a year of testing with its own employees, Amazon opened its first checkout-free retail concept called Amazon Go yesterday. The 1,800 square-foot store is housed in an Amazon office building and is stocked with the usual convenience store items. Its proprietary technology that Amazon calls “just walk out technology” is made up of hundreds of cameras and sensors. To enter the store, customers must have an Amazon account and a credit card on file, along with the Amazon Go mobile app. So far, the store is said to be operating flawlessly; the Company has indicated it has no plans to extend it to the Whole Foods format.
Kroger
Following reports that Kroger was believed to be considering an acquisition of online wholesaler Boxed, new reports have surfaced suggesting Kroger is also interested in the e-commerce business of Overstock.com. Overstock CEO Patrick Byrne said in December that he plans to sell or reorganize the e-commerce business to focus on blockchain technology.
In other news, Kroger is actively recruiting experienced retail and digital and technology talent for new and open corporate and store management roles across its family of companies. As part of its Restock Kroger initiative, which the Company announced this past October, Kroger is investing an incremental $500.0 million in human capital over the next three years. The plan has four main drivers: Redefine the Food and Grocery Customer Experience, Expand Partnerships to Create Customer Value, Develop Talent, and Live Kroger’s Purpose. The plan is expected to generate $400.0 million in incremental operating margin by 2020.
Finally, Kroger is rolling out new technology called Kroger Edge that will digitally display pricing and nutritional information on store shelves, as well as video ads and coupons. The technology will allow the Company to instantly change prices and activate promotions. While it is currently only in a handful of stores, about 200 are expected to participate by the end of 2018.
Albertsons
On December 1, Albertsons Companies entered into an agreement with Tenedora CL del Noroeste, S.A. de C.V. to sell its 49% equity interest in Casa ley to Tendora for $6.50 billion Mexican pesos (US $347.8 million). Casa Ley is a grocery store chain with the majority of its stores located in Western Mexico. The sale is expected to be completed by February 28, 2018. Proceeds from the sale will be used to pay holders of contingent value rights received by former holders of common stock of Safeway at the time of Safeway’s 2015 merger with Albertsons.
Shiekh Shoes LLC
Documents filed in the Shiekh Shoes LLC, DIP Chapter 11 case indicate that Shiekh S. Ellahi, the Company’s owner, has agreed to a request by the Creditors’ Committee that a sale of the Company be pursued as a back-up to the Debtor's primary goal of a reorganization. The sale procedures include contacting 30 strategic or financial partners. The Debtor separately stated that it “may discontinue the marketing and sale process at any time.” Creditntell notes this statement may be an indication of the Debtor’s distaste for the sale option; it would not be surprising if this statement is challenged in future filings. Court documents also note that in addition to the 31 stores already being closed, the Debtor has also filed motions to reject leases on 15 other stores. The Company operated over 100 locations at the time it filed for bankruptcy.
7-Eleven
7-Eleven announced today that it has closed on the acquisition of approximately 1,030 Sunoco convenience stores located throughout 17 states. This is the largest acquisition in 7-Eleven history and will bring the total number of stores to approximately 9,700 in the U.S. and Canada.
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Starbucks
In July, Starbucks announced the closure of its 379 Teavana stores, with the majority closing by spring 2018. Starbucks cited declines in traffic as the primary reason for the closures. However, mall owner, Simon Property Group argued in court that the Teavana store closures in its 77 retail locations would result in a breach of Starbucks’ lease obligations as this was not a result of a bankruptcy. Simon also said that closing the Teavana stores could trigger additional store closures in its malls. As a result, the judge ordered Starbucks to keep the Teavana stores open at Simon Property Group’s locations. Starbucks had planned to appeal the ruling but recently reached a settlement with Simon. The parties declined to reveal the terms of the settlement. Starbucks did not discuss its intentions for the remainder 302 Teavana locations.
Friedman's Freshmarkets
Founded in 1918, Friedman’s Freshmarkets will close its three remaining stores in Butler Township, Saxonburg, and Chicora, PA on January 27. After the Company’s previous wholesale supplier declared bankruptcy in September 2014, Merchants Distributors Incorporated (MDI) began supplying Friedman’s. According to Friedman’s President and CEO Carole Bitter, that was a “bad decision” resulting in damaging behavior including disruption, increased costs, and poor performance. Friedman’s has since filed a lawsuit against MDI.
Safeway
After reopening less than two years ago following an extensive remodel, Safeway will close a store in Springfield, OR by February 24. The 53,360 square-foot underperforming store is less than a mile from an Albertsons.
Meanwhile, the Company is also closing an underperforming Safeway supermarket in Bethesda, MD. It has a number of nearby locations, including another store in Bethesda that will remain open.
ABC Supply
ABC Supply opened a new branch in Valparaiso, IN last week. With the new location, the Company now has 15 units throughout Indiana and more than 700 nationwide.
Wegmans
A new Wegmans Food Markets in Virginia Beach is scheduled to open in 2019. Construction on the 130,000 square-foot store is expected to start this spring.
K-VA-T Food Stores
K-VA-T Food Stores will close a Super Dollar Discount Foods store in Lynchburg, VA on February 9. There are currently 10 Super Dollar stores. The Company did not specify if any of the other stores were closing.
Foot Locker
Foot Locker announced that it has made a strategic investment in Carbon38, taking a minority stake in the brand. Founded in 2012, Carbon38 curates the luxury active fashion brands, as well as designs and manufactures its own in-house line. The $15.0 million Series A funding round brings the total raised by Carbon38 to $26.0 million since 2013. As part of the deal, Foot Locker EVP and CFO Laura Peters will join Carbon38’s board of directors.
Aldi
A new Aldi store will be opening in Decatur, GA on Thursday. The Company says the store will feature more fresh items, including more produce, dairy and bakery selections.
Rite Aid / Walgreens
Yesterday, Rite Aid provided an update on the progress of its plans to sell stores to Walgreens Boots Alliance (WBA), as per the Asset Purchase Agreement dated September 18, 2017. As of January 22, 2018, Rite Aid transferred 625 stores and related assets to WBA, and received cash proceeds of $1.31 billion, which it is using to repay all of its $970.0 million of outstanding secured term loans. WBA will purchase a total of 1,932 stores, three distribution centers and related inventory from Rite Aid for $4.375 billion on a cash-free, debt-free basis.
Walmart
Walmart is reportedly in talks with buyout firm Advent International Corp. and other funds to sell a major stake in its Brazilian operations, according to two people with direct knowledge of the matter. Other private equity firms that are looking into the investment in the Brazilian unit are GP Investments Ltd and Acon Investments LLC, which also owns Fiesta Mart. Meanwhile, reports have surfaced that Advent was in talks to acquire 50% of the unit. In 2016, Walmart CEO Doug McMillon warned investors that he was planning to review Walmart’s global operations and that same year shuttered at least 10% of its stores in Brazil. A partial exit by Walmart from Brazil comes as COO Judith McKenna takes over the international unit (see our Personnel Changes section below). Walmart entered Brazil in 1995 and currently operates 471 stores there. The Company’s Brazilian unit reported revenues of almost 30.00 billion reais (US$9.39 billion) in 2016.
In other news, Walmart recently applied for a patent for a system that allows customers to preview food items selected for their online orders through pictures. The system is referred to as a “Fresh Online Experience” in the patent, and would use 3D scanning to show online shoppers in-store items.
Dunkin' Donuts
Dunkin’ Donuts recently opened a next generation concept store in Quincy, MA, that is reportedly described as “a brighter, airier, hipper reboot of Dunkin.” It is only the third store to drop ‘Donuts’ from its name. The store offers mobile pick-up and a drive-through lane.
Shake Shack
Shake Shack has plans to open at least four new locations in New Jersey this year, continuing its expansion into the state. Stores will open Parsippany, Wayne, Evesham and Lawrence Township, bringing the total number of New Jersey locations to eight. There are currently 126 Shake Shack locations worldwide including 88 in the U.S.
