HSBC analyst Mark Husson said in a note to clients that supermarket chains such as Kroger, Safeway, Supervalu and Delhaize America have weathered the worst Wal-Mart dished out and are now in much stronger competitive positions. Others, such as Albertsons and Winn-Dixie, he observed, were not as fortunate.
According to an Associated Press report citing Mr. Husson, supermarkets have been rocked in recent years by what he referred to as a "black death" brought about by Wal-Mart's push to food dominance in markets where it expanded its supercenter format.
Between 2001 and 2004, U.S. foods sales at the world's largest retailer grew between 18 and 25 percent a year. For this year, Mr. Husson sees food sales growing about 15 percent.
A number of factors are behind Mr. Husson's analysis that supermarket chains are in a better position to compete with Wal-Mart. For one, grocers have improved supply chain efficiencies and negotiated favorable union contracts to make them more competitive on prices than they have been in the past. Supercenters once sold food at 20 percent below the price charged by grocers. Today, that number stands between five and seven percent.
Mr. Husson also sees Wal-Mart slowing down some "partly because the age profile of the supercenter installed base is aging quickly and older stores have comp-store sales growth that is slower than the more youthful ones."
Discussions Questions: Do you agree with Mark Husson's assessment that grocers, at least large chains such as Kroger, Safeway, Supervalu and Delhaize, have narrowed the gap between themselves and Wal-Mart? Where have grocers made the biggest strides in going up against supercenters and what do they need to do to make further advances?