Follow-ups
Supermarkets
In the May 27, 2003, edition of the Wall Street Journal, a story ("Price War in Aisle 3.") deals with the ascendancy of Wal-Mart in the U.S. supermarket industry. Here's a bit of the analysis from the article by Patricia Callahan and Ann Zimmerman.
The rivalry between Wal-Mart and No. 2 Kroger, based in Cincinnati, No. 3 Albertsons, of Boise, Idaho, and No. 4 Safeway, of Pleasanton, Calif., eventually could mean the death of at least one of the chains. Even with little direct Wal-Mart competition, Albertsons has been shrinking, closing underperforming stores, and Safeway is struggling o digest a plateful of acquisitions of regional chains. In smaller markets, independent stores and regional chains already are feeling pressure. In the past decade, 29 chains have sought bankruptcy court protection, with Wal-Mart as a catalyst in 25 of those cases....
That article goes on to show that Wal-Mart's dominance comes from cutting labor costs to the bone. And the other majors are finding ways to compete.
Here's the WSJ figures, similar to ours. It figures in all Wal-Mart stores that sell groceries, using its grocery revenues only.
| Retailer |
Stores |
2002 results (Billions) |
| Wal-Mart |
2,875 |
$54.0 |
| Kroger |
2,488 |
$51.8 |
| Albertsons |
2,287 |
$35.6 |
| Safeway |
1,481 |
$32.4 |
Oracle/PeopleSoft
We were interested in June 9 Wall Street Journal's cover story ("Oracle's Bid for PeopleSoft Offers Possible Taste of Future." About the hostile takeover, the article notes:
But no one who has been listening to Mr. Ellison's recent predictions about the high-tech industry should have been very surprised. Silicon Valley is past its prime, Mr. Ellison has argued in recent months, and from now only a few big companies will survive as other fall away or are consumed.
And further:
The harsh environment [in Silicon Valley] could prompt a wave of mergers, as tech firms that were able to go public during the buoyant stock market of the late 1990s seek lifelines from better-heeled rivals.
One theory the article explores is whether the bid was simply a ploy to cause problems for PeopleSoft, and will be withdrawn once the damage is done.
Milk-based beverages
Also in the June 9 Wall Street Journal is an article called "Moove Over, Milkman," by Betsy McKay. The article discusses the move of soft-drink companies into the flavored milk market.
Next month, Coke, Atlanta, plans to roll out blueberry, strawberry, chocolate, and vanilla-banana flavors of Swerve, a milk-based drink. Raging Cow, launched by Cadbury-Schweppes] in March, comes in five flavors…Other drink makers are promoting milkshakes and, believe it or not, carbonated milk.
The article points that milk actually makes up only around 50% of these drinks, and that the calorie load is higher than an equivalent amount of soda.
AOL-Time-Warner
An AP story (June 6) writes that AOL-Time-Warner has decided to take its book division off the block. It appears that no one wanted to pay what the company thought the division was worth, The company had hopes to sell the division for from $300-$400 million, but no takers in that range. Even that sum would have been a drop in the bucket, given AOL-Time-Warner's enormous $27 billion debt.
