business news in context, analysis with attitude

by Kevin Coupe

Interesting piece in the Financial Times about Aldi's planned acquisition of Southeastern Grocers' Winn-Dixie and Harveys stores, which it says reflects a marketplace in which everybody is jostling for scale - it is all about locations.

That's why Aldi, which has specialized in small, limited assortment stores, is willing to take on much larger conventional locations that will bring it much closer to its goal of having 2,400 stores in 38 states by the end of 2023.  While this is ambitious, this goal is dwarfed by Dollar General's growth rate - it currently has more than 19,000 stores, with a 2023 goal of opening some 1,000 new stores.

And then, FT makes this point:  

"Aldi’s estimated $37 billion US turnover in 2021 is dwarfed by Walmart’s $370 billion for the same year.  'In the past, retailers like Walmart have responded to investments from these discount chains,' said UBS analyst Michael Lasser in a note. 'The key here is how Walmart will respond. It tends to be the price-setter in the market and other players follow suit'."

Add into this the proposed Kroger-Albertsons merger, which is all about scale.  "Jostling" for scale may actually be an understatement … we could be in for enormous competition for locations and market share even as consolidation continues to take place.

All of which puts enormous pressure on smaller companies and independent retailers to define and exploit their own differential advantages that serve customers in ways that larger competitors cannot or will not.

Creating, potentially, an Eye-Opening time of enormous change and tumult.