Major Players in Houston

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Ephrata1966
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Major Players in Houston

Post by Ephrata1966 » 02 Nov 2010 17:48

For being a major city, Houston seems more than a little under-served for supermarkets. This is not a new thing. The only large chain here has been Kroger most of the time. Randalls is not really "mainstream" being a family chain, and sometimes a classy chain. Therefore Safeway has little real presence in Houston, at least after all the Randalls closings. Three of the surviving Randalls (not sure how many are left) are "Flagship" Randalls. This puts these stores out of most shoppers' price range. Safeway itself in Houston only lasted a relatively short time, 1970-1988. They did buy Weingarten's during that time, which was a smaller chain, and was briefly owned by Grand Union. A&P never had stores in Houston, but probably Texas at one time. Wal-Mart/Walmart really is no substitute for a supermarket. They did have at least one "Neighborhood Market", but I think it closed. Albertsons once had dozens of Houston stores, but only from 1995-early 2002! H-E-B, a Texas chain, only entered Houston in 1992. And for at least ten years, most of their stores were the low-end "Pantry Foods" division.

Case in point: I lived in a respectable middle class section of Northwest Houston for a few years. My house was almost surrounded by one Randalls, one Albertsons, and one H-E-B Pantry Foods (former Safeway/AppleTree and later Randalls). Now, all Randalls within five miles except for a Flagship have closed, the Albertsons is a Kroger, and the H-E-B Pantry Foods (did not last) is a Stein Mart. The only options for perishables were two different Krogers for a while. H-E-B did build a brand new store across from the old Pantry Foods just recently.

But why have more closed stores not become independents? Houston today is littered with empty Randalls and Albertsons that closed 5-10 years ago, and ones that were subdivided into tacky stores and "service" businesses. Why does no one have a use for these practically NEW supermarkets? Not even other retail chains? Kroger is the only chain in most of the city. Sorry to speculate on the future, but H-E-B, Fiesta, and Food Town still seem to have room for expansion. Publix ought to give Houston a try. So could Ahold. I still don't get why Acme/Pathmark never were here. Perhaps Kroger and Safeway filled that void.

Note: Trader Joe's still has no stores in Houston, and ALDI/Save-A-Lot have few.

klkla
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Re: Major Players in Houston (Then and Now)

Post by klkla » 02 Nov 2010 19:42

Texas (with the exception of Austin) has always been a brutal place for selling groceries. The reason has to do with what is referred to in the industry as 'barriers to entry'. In other words how hard is it to buy real estate, get building permits, e.t.c.? Also, how expensive is it to open a supermarket in a given market?

Texas has generally had very low barriers to entry. Compare Houston to San Francisco as an example. It's next to impossible to open a supermarket in San Francisco. As a result Safeway, which has been there forever, is able to operate medicore stores with high prices and dominate the market because nobody else can overcome the barriers to entry on a large scale.

Hoston is just the opposite. It's easy to find large parcels of land, get permits, neighborhood approval and build new stores. As a result there is always a chain(s) expanding there and building new stores (WalMart has been that chain for the last decade as well as Kroger and HEB on a smaller scale). A mediocre operator like Safeway typically struggles in this type of environment as shown by the decline in market share for Randall's since they purchased it, which is now in a distant fourth place in market share. It had a strong number two market share when Safeway bought it.

At it's peak Randall's was actually #1 achieving 29% market share as recently as the early 80's. Kroger took that lead by buying numerous competitors that had failed in the market and then WalMart took the lead by aggressively building SuperCenters... made possible by the low barriers to entry. It's unlikely they could have done the same thing in places like Los Angeles, San Francisco, Seattle, New York, Boston, Miami and other cities where the cost of real estate and factors like neighborhood resistance will probably hold them back for years to come.

Why don't more chains expand there now? The answer is simple: WalMart will chew them up and spit them out. It's unlikely any new chains will enter the market because the dust hasn't settled yet with respect to WalMart's fairly recent expansion. Kroger, Fiesta and HEB will expand slowly when they can find good real estate opportunities but outside operators are unlikely to expand there unless they can acquire an existing chain (as recently as four years ago Safeway couldn't give away Randall's and decided to stay, reduce their store base to locations in wealthier neighborhoods or neighborhoods that have higher barriers to entry and introduce the lifestyle format - which has worked for the most part - even though their market share as decreased they are no longer losing money in Houston).

wnetmacman
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Re: Major Players in Houston (Then and Now)

Post by wnetmacman » 02 Nov 2010 20:24

Ephrata1966 wrote:The only large chain here has been Kroger most of the time..
Kroger came to Houston via an acquisition, of the Henke & Pillot stores. They actually kept the Henke name for some time after. Kroger didn't actually come in until the mid to late 60's.
Ephrata1966 wrote:Randalls is not really "mainstream" being a family chain, and sometimes a classy chain.
I disagree with this. The sale to Safeway killed the family aspect of Randalls. They are all cookie-cutter Lifestyle Safeways now, except for the banner on the door.
Ephrata1966 wrote:A&P never had stores in Houston, but probably Texas at one time.
A&P had stores in North and East Texas, but you're right, never in Houston.
Ephrata1966 wrote:Wal-Mart/Walmart really is no substitute for a supermarket. They did have at least one "Neighborhood Market", but I think it closed.
There are actually 8 Neighborhood Markets; mostly to the west of Houston, except for a store in Kingwood.
Ephrata1966 wrote:Albertsons once had dozens of Houston stores, but only from 1995-early 2002!
The Houston division was actually cited as part of Albertsons' downfall.
Ephrata1966 wrote: H-E-B, a Texas chain, only entered Houston in 1992. And for at least ten years, most of their stores were the low-end "Pantry Foods" division.
The Pantry Foods division was mainly for acquired stores, though they built several. The concept has been abandoned in favor of their mainstream stores, of which dozens exist around Houston.
Scott Greer

Ephrata1966
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Re: Major Players in Houston (Then and Now)

Post by Ephrata1966 » 02 Nov 2010 20:41

klkla:

Very interesting. Why is Austin different?

But don't anti-trust laws stop Safeway (or Kroger) from a monopoly/price gouging?

Most original Randalls were built in the early 80's. Almost all have been closed or relocated since Safeway took over. What is ironic is that most Randalls that were built as Safeway closed before the merger. And several of the current Randalls are former Albertsons. One Randalls Flagship (I forget where) started, no kidding, as a tiny Weingarten's!

Perhaps Safeway and especially Kroger began a rapid expansion in the early 80's to compete with Randalls. A well-preserved early Kroger greenhouse is across from the dying Greenspoint Mall. I think Kroger may have even partnered with Wal-Mart/Walmart (then called Wal-Mart Discount City) during this time as co-anchor. Kroger probably needed the extra traffic.

So how does Philadelphia/Baltimore/DC compare with barriers to entry? We have had Acme/A&P/Super Fresh/Pathmark forever, and none are still competitive. Kroger, Safeway, H-E-B, Publix ought to eclipse them. Would Safeway (Genuardi's) still be losing money here? Five Genuardi's have closed in three months. I hear serious rumors the chain will follow. Dominick's, the Safeway Chicagoland chain, is supposed to be hurting too.
Last edited by Ephrata1966 on 02 Nov 2010 20:57, edited 1 time in total.

Ephrata1966
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Re: Major Players in Houston (Then and Now)

Post by Ephrata1966 » 02 Nov 2010 20:57

wnetmacman: Could you please name an original 60's Kroger? I am only familiar with the superstores and greenhouses. Kroger bought over a dozen of the Albertsons too.

The American Stores acquisition/merger was what really killed Albertsons. You see, American Stores was just another name for Acme Markets. They at one time were like Goliath. Albertsons probably was of smaller scale. Acme had their share of troubles before Albertsons came in, but owned the famous Jewel Companies of Chicago and Lucky on the West Coast. They even threw in a couple drugstore chains. This was simply too much debt for Albertsons. Stores like this are where the American Stores name was first used, circa 1917: http://www.flickr.com/photos/62355920@N ... 996056664/

Notice the contrast between Albertsons and Safeway when it comes to acquisitions. Albertsons bought a huge chunk of household names, while Safeway went for like-minded regional chains. Randalls, Genuardi's, and Dominick's are all hurting, but Safeway continues to build new stores. I saw one in person in Timonium, MD (or Towson?) a few months ago. Perhaps this killed the Super Fresh (former Centennial A&P) in Towson last month.

wnetmacman
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Re: Major Players in Houston (Then and Now)

Post by wnetmacman » 02 Nov 2010 22:10

Ephrata1966 wrote:wnetmacman: Could you please name an original 60's Kroger? I am only familiar with the superstores and greenhouses.
Kroger has pretty much replaced all their stores before the greenhouse era, and has started on those too. Most of the pre-'68 stores were Henke's.
Ephrata1966 wrote:Kroger bought over a dozen of the Albertsons too.
As did Food Town and HEB.
Ephrata1966 wrote:The American Stores acquisition/merger was what really killed Albertsons.
Somewhat. Albertsons had already embarked on a huge expansion program that had began to overextend the chain. Houston and New Orleans were the prime examples; neither lasted 10 years. One store in New Orleans was doing 1/10th of the sales of a normal store.
Ephrata1966 wrote:Albertsons probably was of smaller scale.
Albertsons was the smaller of the two. It was really a 60/40 merger, but Albertsons was the buyer.
Ephrata1966 wrote:Albertsons bought a huge chunk of household names, while Safeway went for like-minded regional chains.
I wouldn't say they went for like minded chains. Genuardis, Randalls and Dominick's have all lost major market share because of Safeway's changes. The changes were so drastic that none of these three are recognizable any more. Randalls/Tom Thumb were an easy target because they were for sale and in areas that Safeway had previously operated (Dallas and Houston). The only problem is that Safeway, as you mentioned before, is fine with cookie-cutter mediocrity.
Scott Greer

proczach
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Re: Major Players in Houston

Post by proczach » 20 Jul 2012 13:47

A&P never had stores in Houston

There were plenty of A&P's in Houston,
corner of Beechnut and Bissonnet
Post Oak south of Bellfort
on Bissonet in Bellaire across from the Randall's that used to be a Weingarten's
the Whole Earth Provision Company At Shepherd and Alabama
that's just the ones I knewabout

pseudo3d
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Re: Major Players in Houston

Post by pseudo3d » 24 Sep 2012 08:54

Albertsons survived in College Station with three stores, with one closing in 2006 or so (after being open for less than five years), one in 2008 (the store was partially torn down for Wal-Mart's expansion), and one going up until 2011, even though it was the only store for miles and miles around. All three are vacant, though the 2006 one is getting reopened by Walmart Neighborhood Market.

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