Already a dynamic landscape, the Twin Cities retail market is bound to see some serious shake-up after Eden Prairie, Minn.-based Supervalu was purchased in July by United Natural Foods of Providence, R.I., for $1.26 billion.
United Natural Foods plans to divest Supervalu’s remaining retail outlets, including the market-leading Cub Foods chain in the Twin Cities.
Supervalu had been working for a couple of years on growing the wholesale portion of the business, in part through the acquisitions of Unified Grocers and Associated Grocers of Florida. It also sold Farm Fresh stores this year.
Retail changes
The retail scene in the Twin Cities has been turbulent in recent years. In 2014, Rainbow Foods closed or sold 27 area stores in the metro area.
Surging to capture some of that business were Aldi, Hy-Vee, Whole Foods and Fresh Thyme, along with expanded grocery sales from Walmart and Target.
The Twin Cities retail market is ever-shifting, said Adam Gamble, president of Russ Davis Wholesale, Grove Heights, Minn.
“Retailers with the largest market share and dominance in the market for many, many years are seeing some pressure and some competition from more recent players in the market like Hy-Vee and Fresh Thyme,” Gamble said.
“I think that the higher-end retailers probably have felt less pressure than the middle-of-the-road conventional retailers.”
Gamble said all retailers feel pressure when a new player comes to town, whether it’s expanded, larger-format Aldi stores or a drugstore chain or a home improvement chain that decides to dedicate more square footage to selling food, he said.
“We have seen all of that, and we’ve seen pressure on conventional retailers from just about every direction you can imagine.”
The pending sale of Cub Foods stores by Supervalu will change the Twin Cities retail market, said Craig Carlson, president and CEO of Carlson Produce Consulting LLC, Chicago.
That could open the door for Kroger to expand in the Twin Cities, he said.
Longer term, Carlson said Amazon could find the combined Supervalu/United Natural Foods attractive as it builds its grocery distribution network.
Twin Cities retail market share data (Minneapolis, St. Paul, Duluth) from Shelby in March this year showed Supervalu with 243 stores at 44.7% of total grocery sales.