Deals Shake up the CPG Retail World

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Deals Shake up the CPG Retail World

09/01/2015

Grocery retailing has always been known for big deals,but in the last year or so, they've been positively seismic.

Ahold and Delhaize are poised to merge and become the fourth-largest U.S grocer. Dollar Tree bought Family Dollar to form a new No. 1 dollar-store chain–and Dollar General, no longer in the top spot, is making ambitious plans to respond. CVS Health is on track to buy the in-store pharmacies of Target Corp., a $1.9 billion deal that would, at one stroke, augment CVS's store total by 22 percent while greatly increasing its geographical reach. Target is getting much-needed cash from the deal, part of its retrenchment under CEO Brian Cornell, who recently completed his first year. Meantime, Aldi is making ambitious plans for expansion in the U.S. (with its fellow German discounter, Lidl, hot on its heels), while Wawa is consolidating its position in Florida, far from its Northeast base.

Deals like these are both caused by, and spur on, certain macro trends in CPG retailing. Multichannel paths to purchase will continue to gain in importance in food and other CPGs, meaning that retailers will both have to invest substantially and remain nimble. As channel lines continue to blur, alternative locations like dollar stores will muscle further into the food business, forcing discounters and mainstream grocers to respond.

Retail Leader's annual Leading Retailers issue features mini-portraits of 10 top organizations and examines how they've been successful in this climate. A good way, we think, of looking at CPG retailing as a whole, to see how industry trends shape major business decisions–and help determine how they work out.