TRIMMING DOWN FOR 2006

The ebb and flow of competition resulted in some top-level changes in the rankings on SN's 2006 list of the Top 75 food distributors in North America.While the possible sale of some Albertsons divisions is likely to shake up the list as the year progresses, three traditional top 20 chains saw their standings fall in this year's rankings - Ahold USA, Winn-Dixie and A&P - to the benefit of three Canadian

The ebb and flow of competition resulted in some top-level changes in the rankings on SN's 2006 list of the Top 75 food distributors in North America.

While the possible sale of some Albertsons divisions is likely to shake up the list as the year progresses, three traditional top 20 chains saw their standings fall in this year's rankings - Ahold USA, Winn-Dixie and A&P - to the benefit of three Canadian companies - Loblaw, Sobeys and Metro.

Ahold USA lost ground with the sale early in 2005 of 450 stores in the Southeast, which resulted in a sales decline of approximately 17.5%; Winn-Dixie lost ground throughout the year as it closed and sold more than 150 stores across its operating area, cutting sales by 15.8%; and A&P lost ground at mid-year with the sale of 234 stores in Canada, dropping sales by approximately 46.3%.

The bulk of the Ahold divestiture resulted in the creation of a new entity - Bi-Lo/Bruno's, based in Greenville, S.C. - which acquired 342 of the Ahold stores and made its debut on the Top 75 list at No. 31, while the concurrent drop in Ahold's volume, coupled with a 10.6% boost in its own sales totals, pushed Toronto-based Loblaw Cos. past Ahold USA into the No. 6 position.

The sale by A&P of its Canadian operations dropped the company out of the top 20 - to No. 21 - and enabled Metro, the Montreal-based distributor that acquired A&P's Canadian stores, to move to No. 20 on the list, with a sales gain of 18%.

While the store closings by Winn-Dixie reduced its volume by approximately $1.5 billion and dropped the chain to No. 16, just one spot lower than last year, the confluence of reduced store counts at both A&P and Winn-Dixie and an 11% gain in its own sales enabled Sobeys, Stellarton, Nova Scotia, to move up two notches to No. 15.

According to industry analysts in Canada, Loblaw gained sales by increasing overall square footage - opening 51 new stores in 2005 - while comparable-store sales remained flat; Sobeys gained sales by increasing comps while square footage remained flat; and Metro gained sales by acquiring A&P's Canadian retail stores last August.

Wal-Mart began offering expanded food lines at its discount stores in Canada during 2005, with mixed results, one analyst told SN. "Wal-Mart is not a food destination. If someone is there buying a hammer or a humidifier, they might pick up some food items, so any food sales are only incremental," he explained. "It's going to be hard for Wal-Mart to change existing shopping habits."

Looking at this year's Top 75 rankings, it's become clear that to qualify, a retailer must be generating close to $1 billion in annual sales. Only three companies on this year's list were below $1 billion, compared with five on the 2005 list.

Three companies dropped off this year's list: Alimentation Couche-Tard, the Quebec-based chain of gas stations and convenience stores, which saw a jump in fuel sales that reduced merchandise sales to less than 50% (the cutoff for inclusion on the list); Piggly Wiggly Carolina Co., Charleston, S.C., No. 73 a year ago; and King Kullen, No. 74 on last year's list.

The disappearance of King Kullen from the list is somewhat ironic, given that 2005 marked the chain's 75th anniversary as the nation's first modern supermarket.

Replacing them in the rankings were Bi-Lo/Bruno's, at No. 30; Kum & Go., a convenience chain based in West Des Moines, Iowa, which debuted at No. 58; and Affiliated Foods, Amarillo, Texas, at No. 65.

The Top 10

Looking at the top 10 companies individually:

1. Wal-Mart Stores, Bentonville, Ark., which continued to lengthen its sales lead over all competitors, with total corporate sales up 11.7% to an estimated $317.3 billion and supercenter sales up an estimated 32.8% to $156.7 billion - approximately 49% of the company's total sales - due to the company's prodigious expansion of supercenters, which encompassed more than 250 openings last year. As a result, sales at Wal-Mart Supercenters are roughly 2.5 times larger than volume at its closest competitor, Kroger.

2. Kroger Co., Cincinnati, which remains the nation's highest-volume traditional retailer with estimated volume up 6.2% to $59.9 billion. An ongoing recovery in Southern California following the 141-day strike-lockout there in late 2003 and early 2004 helped the company improve its sales performance in 2005. Results include volume from fuel and fine-jewelry stores.

3. Costco Wholesale Corp., Issaquah, Wash., which had a sales increase of nearly 10% to $51.9 billion last year, of which consumables accounted for approximately $31.1 billion, or 60% of the total. The gap between Kroger and Costco, which was $9 billion a year ago, narrowed to $8 billion.

4. Albertsons, Boise, Idaho, which is expected to record a sales gain of 4% to an estimated $41.3 billion for the fiscal year ending early next month. Despite some recovery from the Southern California labor dispute, Albertsons' performance has not been as strong as that of either Kroger or Safeway, and in September management put the company on the selling block, only to say in December that it would seek to divest only its underperforming assets.

5. Safeway, Pleasanton, Calif., which saw sales increase 7.8% to an estimated $38.6 billion in 2005, based on a post-strike turnaround in Southern California and a strong performance by its lifestyle stores.

6. Loblaw Cos., Toronto, which moved up one spot ahead of Ahold USA on the strength of the 51 store openings during the year, with sales up 10.6% to $24 billion (U.S.).

7. Ahold USA Retail, Quincy, Mass., which experienced a sales decline of 17.5% in 2005 when it sold its Southeast divisions last winter. In that transaction, 234 stores were acquired by a new entity, Bi-Lo/Bruno's (No. 31), and 83 stores went to Southern Family Markets, a newly created affiliate of C&S Wholesale Grocers, Keene, N.H. (No. 11).

8. Publix Super Markets, Lakeland, Fla., moving up from No. 9 a year ago, with estimated sales rising 4.4% to $20.1 billion "based largely on its ability to vanquish all competition," one industry analyst told SN.

9. Supervalu, Minneapolis, with estimated sales up 2.1% to $19.9 billion. Despite the sales gains, however, the distributor dropped from a No. 8 ranking a year ago largely due to softness in sales at its Save-A-Lot extreme-value chain as lower- to middle-income consumers experienced pricing pressure from higher gas costs.

10. Delhaize America, Salisbury, N.C., a division of Brussels, Belgium-based Delhaize Group, which saw sales climb 4.4% to an estimated $16.5 billion, as it benefited from an ongoing remodeling effort and its program in Florida of upgrading Kash n' Karry Stores to the new Sweetbay banner.

Among other companies on the Top 75 list:

7-Eleven, Dallas, moved up a notch to No. 12, largely on the strength of increasing fuel prices during the year.

Meijer, Inc., Grand Rapids, Mich., fell to No. 13 as it continued to face increased competitive pressures from Wal-Mart supercenters and Costco.

Wakefern Food Corp., Elizabeth, N.J., moved up four notches to No. 16 as a result of more consistent execution in a changing market and in part because of the struggles by its two major competitors, A&P and Pathmark. (Pathmark, with flat volume, fell to No. 30, from No. 27 a year ago.)

The sale by Roundy's Supermarkets, Milwaukee, of part of its wholesale distribution business resulted in a sales drop of approximately 25% and a drop in the rankings to No. 32 from No. 23 a year ago.

Demonstrating the growing strength of organic and natural formats, Whole Foods Market, Austin, Texas, moved up four notches, to No. 26 from No. 30, with a sales jump of 20.5%;

United Natural Foods, Dayville, Conn., rose to No. 44, from No. 49 a year ago, with sales rising approximately 15%, and Wild Oats Markets, Boulder, Colo., rose to No. 60, from No. 66 a year ago, with sales increases estimated at 15.4%.

Wawa, the Pennsylvania-based convenience-store chain, moved up to No. 29, from No. 36 in 2005, with a sales gain of approximately 39% due largely to escalating fuel prices during 2005.

Houchens Industries, a diversified company operating 146 supermarkets under a variety of banners, rose five spots to No. 38, from No. 43 last year, with a sales gain of approximately 12.5%.