business news in context, analysis with attitude

The Houston Chronicle reports that speculation is building that Safeway wants to divest its Randalls chain there in the face of declining sales and market share, and has been in touch with potential buyers about selling off all or part of the division.

Safeway purchased Randalls and Tom Thumb from the Onstead family for about $1.8 billion in 1999, a point at which it had a 20 percent market share and was the second-ranked chain there. Today, according to the paper, the company has an 11.8 percent market share and is ranked fourth, behind Kroger, HEB, and Wal-Mart.

Burt Flickinger III, managing director of Strategic Resource Group, tells the Chronicle that it is likely that of Randalls were to be sold off, it would be in pieces, with stores going to companies that would include Kroger, HEB, and Whole Foods.

No timetable has been suggested for the possible divestiture.
KC's View:
Let’s be fair to Safeway for a second.

The supermarket business is tough for everybody, and the emergence of Wal-Mart as a major power certainly has cramped its prospects. Safeway’s problems hardly are happening in a vacuum.

That said…and this is where some people may think we’re being unfair…one has to wonder at what point accountability sets in. This makes for two major acquisitions by Steve Burd and Safeway that have plummeted in value – the other being Dominicks in Chicago, which was so devalued that Safeway couldn’t even sell the damned thing.

Where does the buck stop at Safeway? What straw will break the shareholders’ back? The Dominick’s straw? The Randalls straw?

At what point does Safeway management say that fundamental changes have to be made in how these stores operate, in how they connect with consumers, in how they are made to be compelling and indispensable to the people who shop there?