Minneapolis -- A number of major supermarket operators are in the process of adding many new stores to an already crowded retail marketplace.
At the annual Piper Jaffray Conference with investors here, executives of several leading operators outlined their ambitious new-store and remodeling plans for the current year and beyond. Piper Jaffray is a locally based investment firm.
Among the most ambitious capital-expenditure plans:
Albertson's expects to build 50 new stores and remodel 50 others this year. The Boise, Idaho-based chain opened 39 new stores last year.
Safeway, which a year ago cut back on capital spending, has plans to add between 15 and 20 new stores in 1994.
Supervalu, one of the nation's
largest grocery wholesalers, should add up to 35 new units this year to what already is a fast-growing corporate store base.
A modern store base is viewed by many industry analysts as a key factor in a company's long-range success. With that in mind, executives from the supermarket companies making presentations at the Piper Jaffray conference came prepared to detail their modernization strategies.
Albertson's, as reported, will spend about $296 million on new stores and $93 million on remodels in 1994. This expansion will push Albertson's into new territory, A. Craig Olson, chief financial officer, said at the conference.
"We're going to have to continue to take on new markets," he said. "We'll probably be pretty conservative and probably only take on one new market at a time."
Albertson's, Olson said, will start "creeping into the Houston market" beginning next year. It already has stores on the outskirts of the city.
Safeway, in an effort to refocus its business, trimmed its capital budget by almost 50% in 1993 to $290 million and opened 14 new stores. It plans to invest about $400 million this year in capital projects, Julian C. Day, executive vice president and chief financial officer at Safeway, told investors.
"We're ramping that capital expenditure [budget] back up slowly," Day said. "I would expect it to be at a higher level in 1995 than in 1994, although I will not yet discuss specific numbers."
Michael Wright, chairman, president and chief executive officer of Supervalu, based here, said corporate food-retailing offers "significant growth opportunities" and will add to the company's overall profitability. "We intend to grow through self-development of the store base that we have as well as with further acquisitions," he said.
Supervalu expects to add between 30 and 35 new stores in the current fiscal year, which will increase square footage by about 9%, Wright said.
Additionally, Food Lion, which cut back new-store plans following a 1992 television news report critical of its deli departments, expects to open between 40 and 50 new stores this year. (The company opened 84 net new stores in 1993 and closed 84 unprofitable locations at the beginning of this year.) Its 1994 capital-expenditure budget is about $200 million, and in 1995 it will be "something north of that," Dan Boone, vice president of finance and chief financial officer, told investors.
"We see ourselves getting back to the 10% to 12% square-footage growth rate in the future," Boone said.