Albertson's plans to spend more than $72 million to open about 16 new "superstores" and will expand another 16 of its 79 existing stores in Southern California, one of the nation's most competitive grocery store areas, a company officer said Tuesday.
"We've had a pretty big expansion program (in Southern California), but it's hard for us to catch up with the big guys," said Gary Michael, vice chairman and chief financial officer of the Boise, Ida., company.
Albertson's, the eighth-largest supermarket chain in the nation, would like to open up to 25 new stores in Southern California, but "there are a lot of competitors for sites," Michael said in an interview Tuesday.
Each of the 16 new stores, which will be opened during the next three years, will cost about $4.5 million and employ about 100 full-time and part-time workers, Michael said. The remodeling and expansion program will be carried out over the next two years, he said.
The closure of the Gemco chain was not the catalyst of Albertson's expansion, although "they were very tough competitors from a price standpoint," Michael said. Rather, Albertson's is opening more stores, primarily in Orange, San Bernardino and Ventura counties, because "there are just so many opportunities in Southern California," he said.
Ranks Ninth in Southland
Albertson's ranks ninth among major grocers in shopper traffic in Los Angeles and Orange counties, according to surveys conducted by the Los Angeles Times Marketing Research Department. The bimonthly polls found that 3.9% of shoppers surveyed in 1985 said they bought the majority of their groceries at Albertson's, compared to 17.5% at Ralphs and 16.6% at Vons, the market leaders.
Michael said the company estimates that it gets 6% to 7% of the total grocery dollars spent in Southern California.
Albertson's expansion will not dramatically change the supermarket balance of power in Southern California because "they're a small competitor compared to some of the others," said Ken Johnson, who follows the grocery industry for the Price Waterhouse accounting firm.
Like many of its competitors, Albertson's has been moving to "superstores," with special deli and pharmacy sections, where grocers can make a bigger profit than on prepackaged goods, Johnson said. "All the competitors are searching for some solution to improve their profit margins," he said.
One Albertson's competitor, who asked to remain anonymous, called the proposed stores a "move to protect what they already have rather than a move to attack."
"I think they're coming to the party a little too late," the supermarket executive said. "They're here after the ice cream has already been handed out."