LETTERS TO THE EDITOR

They're the Backbonegreat interest your cover story on Mike Teel and Raley's in the Aug. 17 issue of SN, and I also read carefully your column "Not for Sale" in the same issue. In your column you repeatedly expressed surprise that a private, family-owned company might be an industry leader in growth, in acquisitions and in creating a strong culture for customers and employees.You shouldn't be surprised.

They're the Backbone

great interest your cover story on Mike Teel and Raley's in the Aug. 17 issue of SN, and I also read carefully your column "Not for Sale" in the same issue. In your column you repeatedly expressed surprise that a private, family-owned company might be an industry leader in growth, in acquisitions and in creating a strong culture for customers and employees.

You shouldn't be surprised. According to original research we have conducted for a private conference, such companies accounted for over 36% of total industry sales in 1996. These private entrepreneurs operated nearly 50,000 grocery stores, including 634 that operated 25 or more stores.

A great deal of recent trade press in the industry has been devoted to the debate over whether the independent sector is growing or shrinking and whether operating 11 stores or fewer should be the definition of an "independent operator." These discussions miss the point, in my opinion. The real engine of entrepreneurship in the supermarket business has long been private, family-owned businesses.

Family-owned grocery companies also play a key role in the accelerating consolidation movement, although this hidden side of the consolidation story hasn't gotten as much notice. Recent acquisitions by Raley's, Hy-Vee, Schnuck's, Price Chopper, Lund's and Basha's, just to name a few, indicate that many family-owned grocery businesses are key players in the consolidation movement.

These businesses do not have to concern themselves with short-term financial results and public financial reporting to stockholders and can, therefore, take a longer-term view on financial results, strategic investment and risk tracking.

-- PHILIP ST. GEORGES

managing director KPMG Peat Marwick retail ventures Washington

Editor's Note: The "surprise" registered in my column was ironically intended. My hope is that the industry will recognize some of the innovations that family-owned businesses bring to the table, and that some of these companies can remain privately held in the face of the current wave of consolidation.