SUPERMARKETS– MILWAUKEE AREA – David Livingston, DJL Research

April, 2017

 Pick ‘N Save – Kroger has closed fewer stores than expected.  Improvements have been made to slow the bleeding of market share.  I still think the closing or consolidation about 20 under-performing redundant stores is needed in order to maintain a sustainable sales per square foot.  At the same time stores in higher income areas should be significantly upgraded into Metro Markets.  Kroger probably regrets buying Roundy’s.  Kroger will keep pushing Pick into the 21st century.  I predict Kroger will improve pharmacy operations and develop gas stations with an expanded fuel rewards program.  This would be consistent with Kroger around the country.  Tuesday another closing was announced in Madison.

 Wal-Mart – their Neighborhood Market concept failed.  No more stores of any format appear to be planned in Milwaukee.  In my opinion Walmart might become the next low hanging fruit to be exploited by Woodman’s, Aldi, and Meijer.   Don’t be surprised to see Walmart continue to exit high shrink neighborhoods.

 Woodman’s – their 3 area stores are very successful and I don’t I don’t expect any more for several years.  They have expanded their grocery delivery services.  The most they ever build is perhaps one store per year.

 Sendik’s – they continue open stores and be flexible with their formats.  Large stores, small stores, and online shopping.  Expect them to capitalize on real estate opportunities that other grocers are too slow to move on.  Expect them to take the skeletal remains of former grocers (Sentry-Waukesha) in higher income areas.  Many of their stores have been former Kohls, Jewel, and Sentry stores.  My gut feel is at some point they will occupy the Fresh Thyme store downtown or the East Pointe Pick N Save.  Currently Sendik’s only has stores in the suburbs and no stores inside the Milwaukee city limits.  Areas such as Muskego, Pewaukee, Oconomowoc, and Menomonee Falls might possibly be future locations.

 Aldi – I would not expect but a few more stores however expect their existing stores to be remodeled and upgraded.  Number one grocer in the USA for sales per man hour.  Some stores are adding bakeries and the recycled news of new products and general merchandise.

 Target – they continue to fail with grocery.  Their executive suite has been a game of musical chairs.  I really doubt they will ever get grocery right.

 Whole Foods – only two stores in the area and their new one has been a disappointment.  I don’t expect any more.  The original store does well.  Overall they do great but too many mediocre competitors are flooding the market in the natural organic segment.

 Fresh Thyme – I predict one more year and they will pull the plug.

 Meijer –probably done constructing stores in the Milwaukee area.  Their stores perform below par compared to their typical units.  They were hoping for a Roundy’s bankruptcy and that didn’t happen.  Meijer is adding home delivery.  The Fox Cities seems to be their next frontier.

 Trader Joe’s – I think there is still room for about two more of this format. Both stores over-perform as usual.  Number one grocer in the USA for sales per square foot.

 The Fresh Market – I expect them to exit within two years.  Another mediocre grocer in the overcrowded natural-organic segment.

Sentry, Piggly Wiggly, and other independents – most perform about market average.  Their store total will most likely remain level and will continue to focus on one-store rural communities.  There are a few exceptions, like Metcalfe’s and Albrecht’s which do quite well.  Fox Brother’s Piggly Wiggly is one of the star performers.  Urban minority area operators like Cermak and Pete’s Produce will probably take advantage of Pick N Saves that close.

 Costco – it appears they have opened the number of stores they need and appear to be doing very well.  Nobody does club stores better than Costco.

 Sam’s Club – They are doing their best to stay relevant and are doing well.  However Costco generally performs much better in the club segment.

 Festival – a store is planned in the old Kmart in Hales Corners.  No hurries to get it open.  They have quietly opened in Kenosha, Paddock Lake, Racine, Ft. Atkinson, Janesville and Madison.  Most of their stores over-perform relative to the competition.

 Hy-Vee – so far they have only opened in the Madison area.  Their stores perform very well.  Now their focus is on the Twin Cities so I don’t expect Milwaukee is on their radar.

 Online shopping and home delivery – Amazon and Peapod will face new competition as Meijer, Woodmans, Pick ‘N Save, and others get more into home delivery.  Other stores will expand their click and collect options such as Walmart.  Shopping services such as Instacart with one hour delivery will probably expand.  More phone apps will be used in supermarkets, speeding up checkouts and assisting with online ordering.