Colorado Real Estate Journal - July 1, 2015
Howard Gerelick doesn’t pull any punches when talking about the grocery industry. “I never have,” Gerelick said after a presentation on the state of the grocery industry at the 2015 Retail Summit & Expo, which drew more than 400 people. “There is no leadership in the grocery store industry,” Gerelick said at the conference on June 11, which was hosted by Colorado Real Estate Journal. “It is all run by last week’s sales,” said Gerelick, who has more than 40 years’ experience in the industry, including working with Safeway, Kroger (the parent company of King Soopers) and Albertsons. “If last week’s sales were lousy, forget about getting any capital” for investments, he said. He said the grocery store business is an extremely volatile business. Not only are leaders in the industry confused, but so are consumers, he said. For example, a survey of 7,200 people found that Trader Joe’s is the most preferred grocer by consumers and Walmart is at the bottom of the ranking. Yet, people also rank low prices and one-stop shopping as important factors and those are areas in which Walmart excels, he said. He is critical of the merger of Safeway and Alberstons, put together by Cerberus Capital Management, which will result in the closing of nine Albertsons stores in the Denver area. “The recent announcement of the closings tells me Alberstons is in full control” of the merger, said Gerelick, who is the co-chairman of the Food Access Task Force for the city of Denver. Albertsons, he said, is more concerned about individual store profits than with market share. He estimated that those nine stores that are closing serve about 300,000 consumers. Safeway, meanwhile, never has carved out a clear identity for itself in the Denver area, he said. And the corporate cultures at Safeway and Albertsons are so different that it will make for a bumpy merger, he said. However, Brian P. Shorter, the managing director at SullivanHayes Brokerage, speaking on an earlier panel at the CREJ conference, assessed the merger differently. He described the merger as creating a “sleeping giant,” which he said “hopefully” will mean more capital investments in stores. The closing of the Alberstons, he said, “opens up the opportunity to backfill that space with the specialty guys. Longterm, I think people are going to be surprised by how strong the Safeway/Albertsons can be,” Shorter said. Gerelick said that King Soopers does the best job of any grocer in the Denver area. King Soopers, he said, has increased its market share by opening stores closer to each other than Safeway did. King Soopers, he said, is not as worried about “cannibalizing” its own stores as much as Safeway and Albertsons. King Soopers, in fact, has been able to buck a national trend by not only surviving, but also competing effectively against Walmart superstores, he said. Gerelick noted during his career he has worked for 11 CEOs and 23 division presidents. “None of them have had a clear understanding” on how to accomplish their goals, he said. “This business is crazy.”
-H&M plans a 25,000-squarefoot store at Southwest Plaza. The store will open this fall and will be the 10th in the state. The retailer will include a “store within a store” section for accessories and sport apparel. It also will also carry H&M’s children’s collection, from newborn to 14 yeas. The store will employ about 40 people. It also will be a sustainable store with initiatives for recycling waste, water conservation, energy-efficient heating, cooling and lighting systems, and environmentally responsible materials, such as certified wood and fabrics.