Competition remains keen in local grocery market

As Albertsons struggles to come up for air, most other Las Vegas grocery stores are floating along nicely, according to industry analysts.

When news of Albertsons' 2,500-employee layoff in Nevada and California hit last month, the focus was on the viability of a venerable brand now owned by Eden Prairie, Minn.-based SuperValu. Analysts say there may be trouble in Eden Prairie and a shakeout in a notably competitive industry, but when they look at some of the other big names in town, they see growth.

"The grocery store industry, overall, is probably very healthy," said David Livingston, a grocery industry analyst from Milwaukee.

Livingston said if a food retailer is fiscally responsible, business is good - people have to eat.

In 2010, the most recent year for which national figures are available, the average household spent $3,624 annually on groceries, according to data from the U.S. Department of Labor's Bureau of Labor Statistics. That's $302 per month.

In Las Vegas, the biggest single factor in the market right now is WinCo Foods' March entrance, said Mark Hamstra, retail-financial editor of Supermarket News. WinCo opened two stores, at 6101 N. Decatur Blvd. and at 80 N. Stephanie St.

WinCo spokesman Mike Read said the brand is thriving in Southern Nevada thus far, but the chain has no immediate plans to open more. Each WinCo employs about 200 people per store.

WinCo's health, though, could mean the beginning of the end for other chains, like Albertsons.

"That chain is very aggressive in grabbing market share everywhere it goes and always spells trouble for the weakest traditional supermarkets in any market," Hamstra said.

In 2009, research on the Las Vegas grocery market was conducted by Metro Market Studies. Then, Walmart had an almost 20 percent share, while Smith's came in second with 18.5 percent and Albertsons pulled into third with 17.9 percent.

Singular Research financial analyst Robert Maltbie said Walmart likely remains the market leader.

"They have the most efficient distribution," Maltbie said. "No one beats Walmart."

With its recent layoffs and struggles with debt, Albertsons could be in trouble, analysts say.

Maltbie said Albertsons' debt prevented the company from refurbishing its stores or fully upgrading its point-of-sale systems, which drove customers away.

"I think they're in dire straits. They just have too much debt," Maltbie said. SuperValu's total liabilities for the year ended Feb. 24 was $12.03 million.

NO CHANGES AS OF NOW

However, Albertsons spokeswoman Lilia Rodriguez said no closures are planned, and there won't be any change in merchandise or in-store services. Nor are there any plans to exit the Las Vegas market, she said.

Maltbie, though, said the chain is getting squeezed on the low end by Walmart and on the high end by specialty stores like Whole Foods.

"They're severely wounded. Sales are going down, and there's probably not a whole lot they can do to reverse that trend," Livingston explained.

Other companies, including Cincinnati-based Kroger Co., are growing. The company owns 46 Food 4 Less and Smith's in the area.

"Las Vegas is a very important market for us," said Marsha Gilford, spokeswoman for Smith's.

Companywide, Kroger earned $439.4 million for the three months ended May 19, up from $432.3 million a year ago. The company has experienced eight consecutive years of same-store sales growth.

"Of course, Las Vegas is as much as part of that as anywhere else," Gilford said.

SPROUTS EMERGES

Another brand gaining strength in the market is Sprouts Farmers Market, a result of the company's May merger with Sunflower Farmers Market. The transaction gives the new company projected 2012 annual revenues approaching $2 billion.

By the end of 2012 Sprouts will have 150 stores in its portfolio, including new locations opening in Northern California and Phoenix, Ariz. The new company employs 11,000 people.

Last year, Sprouts merged with Henry's Farmers Market, a transaction that added 43 stores to Sprouts' portfolio.

In late September, the two Las Vegas Sunflower Farmers Market locations will become Sprouts stores throughout a two-week period. All Sunflower market employees will retain their positions. Sprouts will remain headquartered in Phoenix, and Sunflower's corporate headquarters in Phoenix and Boulder will be consolidated into the Sprouts office.

Sanders said there's "opportunity" for another store or two in the Las Vegas market in the next few years, but don't expect another just yet, as Sprouts is still learning the city.

So what happened to Albertsons?

In mid-June the company reached a 30-year low, reducing its valuation to 3.9 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg News Service.

Maltbie said the company just hasn't been able to keep up with others in terms of what its stores offer consumers.

Livingston said he thinks Albertsons will exit the Las Vegas market in a "couple of years."

"The whole company's suffering nationwide. They're unable to compete overall," he continued.

Other than Albertsons, Livingston doesn't see any other chain on its way out of the Las Vegas market.

Albertsons operates 35 Nevada stores. Layoffs began June 17 and should have been completed by Sunday .

'SAD' SITUATION

Mike Gittings with the United Food Commercial Workers Local 711 termed the layoffs "sad" and commented: "We don't agree with the situation there. We don't agree with these cutbacks."

Adding to possible Albertsons issues are concerns raised by a 15-year employee that the chain might be in violation with the union agreement. The man's employment status was reduced to part-time, along with 10 others at his store, based on being hired after 1994, he alleges.

Gittings said he can't specifically comment as it's "still the subject of a grievance procedure." But, he said he thinks the employee may have some misinformation.

Contact reporter Laura Carroll at lcarroll@ reviewjournal.com or 702-380-4588.