Roulston Research April 19th Food Retail Conference Call with Former Wal-Mart and Shop ‘N Save Executives

April 23, 2013

Roulston Research recently held their Food Retail Conference Call on April 19th with Lee Armbuster and Robert Anderson. Lee Armbuster is the Former President of Shop ‘N Save, Former Corporate VP of General Merchandise and National Procurement & Distribution at SUPERVALU, and Former President at Laneco with over 25 years of retail executive experience within the formats of Supercenters, Supermarkets, Mass Retail and Drug/Pharmacy. Robert Anderson is the President of Store Brand Consulting and Former Vice President and General Merchandising Manager of Private Label at Wal-Mart. The presenters highlight some key trends including what is happening to the center of the store, areas of inner circles that typically lose money, mergers & acquisitions, and important considerations when looking at companies’ operational and strategic strategies that have effected and changed the food retail industry. Also mentioned are the advantages and disadvantages of some of the traditional food retail channels and a unique take on the definition of value explained in the presenters three tier private label program explanation.

Both speakers had a positive outlook for private labeling. Private labeling has done well in 2 of the previous 3 recessions (minus the last one). Private brands continue to grow year after year as consumers view private brands, such as great value as good as name brand products. The ConAgra acquisition of Ralcorp is viewed positively by the presenters. It positions ConAgra as one of the top CPG companies by diversifying their categories where their competition wasn’t operating. Ralcorp is viewed as a company with great management and strong brands that will help ConAgra sustain market share. When looking at the non traditional channel vs. the traditional channel of food retailing, a good place to start would be the extreme value space. Companies such as Dollar General and Family Dollar are offering a nontraditional strategy to fend off the likes of Wal-Mart and other extreme value players. Family Dollar is place their food items in the back of the store in hope of enticing consumers to buy general merchandise as they make their way to the food segment and Dollar General is rolling out their food market approach, as more and more companies offer move towards offering the same items. However, as general merchandising companies in the extreme value space add more food items, their will be an increase in higher labor cost and higher (SG&A) expense leading to a lower EBIT. Traditional retailers will maintain profitability if they can sustain a differentiation strategy. A good example would be Kroger’s pricing for relationship strategy, which prices items that delights the consumer to a level that eclipses other potential barriers to being a primary customer based on interest, location, and demographic, offering more of a custom based offering from each to store to foster relationships. Companies that are covered and not mentioned above include Kol Foods in the organic market, General Mills, Target, SuperValu, Trader Joes and more. If you are interested in listening to the podcast from the event or engaging Robert or Lee in a 1 on 1 discussion, please contact info@roulstonresearch.com.

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