Inside This Issue - Opinion
The silent retail revolution
October 21st, 2013
by David Pinto, Editor
The announcement earlier this month to the effect that Safeway would seek to jettison the Chicago-based Dominick’s grocery chain it acquired so many years ago elicited the expected reaction from within the retail community: What took Safeway so long to acknowledge the error it made in acquiring Dominick’s in the first place?
In the absence of any concrete answers, the old Sherlock Holmes dictum once again comes to the rescue: "Eliminate the impossible. Whatever remains, however improbably, must be the answer."
Thus, it can safely be concluded that Safeway held on to Dominick’s because its recently retired chief executive, Steve Burd, didn’t want to publicly acknowledge his failure in getting America’s No. 2 supermarketer tangled up with Dominick’s in the first place.
At any rate, Safeway, a retailer that is doing more things right these days than at any time in the past decade, clearly made an error in its Dominick’s expedition. Perhaps not in acquiring the Chicago-based food retailer, but clearly in failing to make that acquisition work — or in admitting its mistake sooner than it did.
The point here, however, is not to fault Safeway. Rather, it is to point out that retailers are generally slower to admit mistakes, or acknowledge progress, than their counterparts in other U.S. business segments.
That said, the progress of several strategic decisions made over the past 24 months could reasonably be questioned in the absence of concrete evidence as to their sustained viability. Several modest examples come to mind:
• Target’s Canadian adventure. Almost a year has passed since Target began opening stores in Canada. First reports indicated that the entry was not proceeding as smoothly as initially projected. But in recent months Target has been eerily silent about the progress of its Canadian excursion. What’s surprising is that Target is a world-class retailer, able to successfully compete against any enterprise thrown against it. Why, then, has there been so little meaningful information coming out of Minneapolis about the retailer’s progress in what is clearly a major expansion initiative? Only Target knows.
• Walgreens’ global expansion initiative. In partnering with Alliance Boots, the global drug retail and wholesale leader, Walgreens embarked on the boldest experiment chain drug retailing in America has yet undertaken. Alliance Boots is, by any definition, a world-class company. Moreover, its strengths clearly complement Walgreens’ own.
Yet, despite the apparent speed with which the alliance is merging the two companies — the new corporate entity in Switzerland, the appointment of Boots executive Alex Gourlay to a senior position at Walgreens, to name two examples — neither Walgreens nor Alliance Boots has succeeded in conveying the sense of excitement and adventure this merger has so clearly produced. Specifically, this partnership is the most exciting and, conceivably, most productive event chain drug retailing has seen thus far in this century. It cries out for exposure, for analysis, for profiling on an ongoing basis. Yet, thus far, the alliance has outstripped the partners’ willingness or ability to tell a story that’s begging to be told.
• Walmart’s small-store experiment. The nation’s largest retailer went to great lengths to announce a new program to open smaller stores while accelerating the expansion of its mid-size Neighborhood Markets model. And indeed, both models are appearing with increasing frequency in markets throughout the U.S. However, the retailer has until recently been relatively silent on the impact —or lack of impact — these smaller stores are having on the company or, more specifically, on the full-size stores that remain the retailer’s mainstay.
Several reasons can be put forth for this reticence. But none is sufficient to explain the company’s reserve over an energetic and brightly conceived plan to add volume to a retailer that needs additional volume. Even if the small-store program is not bringing in the results expected of it, the retailer’s foresight in launching it is reason enough to keep the media and financial community appraised of its progress.
Other examples of bold retailing initiatives abound: Walgreens’ flagship store program, Whole Foods’ attempt to recast the grocery landscape in a healthier hue, Amazon’s effort to recast the consumer shopping experience, Kroger’s attempt to recast itself as a multi-pronged grocery retailer, Albertsons' efforts to integrate its Supervalu grocery stores into its company.
These are transformative, transformational programs. They will likely, in a short time, restructure the U.S. retailing landscape. But the silence that has accompanied their rollout creates an atmosphere where only the worst is suspected — despite the fact that, in the main, these programs have thus far worked well.