Schnuck’s Ready for Wal-Mart

Jul 22, 2002

During the last 14 years, Craig Schnuck, the chairman and chief executive of Schnuck Markets Inc., has rarely made a business decision without Wal-Mart in mind, he says. For Schnuck and other St. Louis-area competitors, including Dierbergs Markets Inc. and Shop ‘n Save, the question isn’t whether Wal-Mart will begin a full-scale grocery invasion, but when, reports the St. Louis Post-Dispatch.

Wal-Mart’s grocery operation has a toehold in St. Louis with eight Supercenters in the region. Burt Flickinger III, managing director of Reach Marketing, a strategic-consulting firm in Westport, Conn., estimates that Neighborhood Markets will open in St. Louis within five years.

Schnuck has sought to expand beyond its St. Louis base. It operates 102 stores in Missouri, Illinois, Indiana, Wisconsin, Mississippi and Tennessee. It recently acquired 12 stores from Albertson’s near Memphis, Tenn., where Kroger Co., the nation’s largest supermarket chain, and Wal-Mart are major players. Mr. Schnuck says his strategy is to buy stores in markets such as Memphis, which are big enough to support Wal-Mart and Schnuck.

Whether the St. Louis supermarkets and the United Food and Commercial Workers Local 655 can keep a united front is also unclear. The union’s three-year contract with Schnuck, Dierbergs and Shop ‘n Save will expire next June. With negotiations set to begin early next year, UFCW President Nick Torpea says he expects the supermarkets to demand concessions from the union under the premise of staying competitive with Wal-Mart.

Moderator Comment: Can Schnuck compete with Wal-Mart?

We’re confident in Schnuck’s ability to maintain its
strong position in St. Louis and the other markets that it serves. Wal-Mart
might be surprised to discover just how strong the connection is between Schnuck’s
and its customers. Supervalu’s Shop ‘n Save format is probably going to have
a bigger fight on its hands, however. [George
Anderson – Moderator

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