Schnuck Markets faced an antitrust battle over its last big hometown acquisition, but company officials don鈥檛 expect similar issues with its purchase of 19 Shop 鈥檔 Save stores.
鈥淲e鈥檝e had discussions with regulators and presently we don鈥檛 have any competition concerns,鈥 Schnucks spokesman Paul Simon said Friday.
If Simon鈥檚 optimism proves correct, we鈥檒l have seen a big change in regulators鈥 attitudes since Schnucks bought dozens of National supermarkets in 1995.
The Federal Trade Commission and Missouri Attorney General Jay Nixon challenged the National deal and forced Schnucks to sell 23 stores. The buyer complained that Schnucks let the stores deteriorate while the sale was pending, and Schnucks was fined $3 million.
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If the FTC didn鈥檛 like the idea of 最新杏吧原创 going from four major supermarket chains to three, why would it let the market go from three to two?
The answer is that the grocery business has changed dramatically. In 1995, the trust-busters looked at Schnucks as competing mostly with other full-line grocers. Today, grocery budgets also get spent at Walmart, discount chains like Aldi and a long list of dollar stores, pharmacies and convenience stores.
Walmart has captured about a quarter of the local grocery market, just a little less than Schnucks. 鈥淭he case for including Walmart as a competitor now is stronger than it was back then,鈥 says Tim Greaney, an emeritus 最新杏吧原创 University law professor.
Still, with Schnucks attempting to add to its market lead, Greaney expects regulators to study the situation carefully. 鈥淚 would be surprised if they didn鈥檛 at least look at it,鈥 he said.
From the perspective of Supervalu, Shop 鈥檔 Save鈥檚 parent company, the 最新杏吧原创 market became so competitive that it no longer made sense to operate here. Sixteen stores that Schnucks is not buying will close by November if no buyers come forward.
Jason Long, a retail consultant with Shift Marketing Group in 最新杏吧原创, said Shop 鈥檔 Save lost its market niche. The chain, founded in 1979, positioned itself as a value-oriented store where shoppers could save a few bucks but had to bag their own groceries.
Expansions by Walmart and Aldi captured many of those price-conscious shoppers, and Shop 鈥檔 Save was never able to match Schnucks and Dierbergs Markets on quality, service or selection.
鈥淚n business circles, we call that being stuck in the middle,鈥 Long said. 鈥淵ou have to either differentiate yourself on quality or position yourself as the low-cost provider.鈥
Burt Flickinger III, managing director of Strategic Resource Group, said Supervalu seemed to have given up on Shop 鈥檔 Save some time ago. His firm鈥檚 staffers shopped the stores earlier this year and found light bulbs burned out, refrigerator cases not working properly and other problems.
鈥淭he market going forward would not have been able to support Shop 鈥檔 Save without the parent company investing a lot in it,鈥 Flickinger said.
His firm鈥檚 shoppers also found that Shop 鈥檔 Save, contrary to its price-conscious image, charged 8 to 18 percent more than Schnucks for comparable items.
If the FTC views Shop 鈥檔 Save as a failing firm, the question becomes who should be allowed to pick up the pieces. Schnucks may be the only retailer willing to keep a large number of stores open and preserve hundreds of jobs.
Will Schnucks鈥 bigger market share lead to higher prices? There may have been a time when being the No. 1 grocer came with pricing power, but Long thinks that day is past.
鈥淵ou can鈥檛 take price increases any more in that business,鈥 he said. 鈥淎ll the grocers had to get savvier when Walmart came in. I doubt there will be much of an impact from a price standpoint.鈥
