Dive Brief:

• When United Natural Foods eventually puts Supervalu’s remaining retail chains up for sale, it will offer grocers the rare opportunity to buy up prime real estate in major markets, according to various reports. UNFI said it planned to sell off Supervalu’s retail assets in order to fund the acquisition.  
• The Cincinnati Business Courier spoke to sources that believe Kroger is a logical buyer for Supervalu’s Cub Foods chain in Minneapolis, citing its ability to become an immediate market share leader. Others, though, questioned the overall value the chain would add for Kroger.
• Meanwhile, Winsight Grocery Business spoke with sources who see a multitude of possible buyers for the Shoppers Food & Pharmacy banner, which has 50 locations in the Baltimore and Washington, DC markets. The list includes Giant, Harris Teeter, ShopRite and even Publix.

Dive Insight:

Supervalu’s retail division had become a roughly $1 billion anchor by the time United Natural Foods acquired the company. But in the hands of other retailers, those stores could become growth engines.

Cub Foods holds the market share lead in Minneapolis and would deliver prime locations and a loyal customer base. Kroger could be an interested party, though its investments of late have been focused on improving its existing store base through e-commerce acquisitions, store updates and store technology. Kroger would also have to sink a lot of money into Cub Foods, with most of the chain's 80 stores still in need of updating and strong competitors like Target, Aldi and Hy-Vee gaining share in the market.

As Jim Hertel with Willard Bishop told the Courier, a Cub Foods acquisition wouldn’t add anything beyond store count. With its Harris Teeter pickup in 2014, Kroger gained an online ordering platform, while Roundy’s and Mariano’s gave it urban store formats. Still, Kroger did make a bid for Boxed — albeit a failed one — and has shown a willingness to pounce on good opportunities. 

Who else could be in the running? Hy-Vee has paused its Twin Cities expansion to regroup but could hit play again with this opportunity. Amazon has the capital to dramatically expand Whole Foods’ footprint, while Target could grow close to its home turf. What seems most likely is that Cub Foods will be split up among a few bidders, much like Supervalu’s Farm Fresh stores were. 

The same could go for Shoppers Food & Pharmacy, which has several possible suitors given its position in red-hot Mid-Atlantic markets. As Winsight Grocery Business points out, the grocer’s stores range in size from 25,000 to 60,000 square feet, making it less of a fit for any one retailer. Nearby stores would also have to be mindful of antitrust concerns, with numerous store overlaps among competitors like Giant and Safeway.

Meanwhile, Supervalu and UNFI continue to seek buyers for its Shop N' Save stores in St. Louis and its Shop N' Save East locations in Maryland, West Virginia, Pennsylvania and Virginia. 

UNFI hasn’t made any further announcements about the sale of Supervalu’s retail stores, but rest assured other chains are carefully considering their options. In a country that’s as saturated with grocery stores as the U.S., the opportunity to snap up locations in competitive markets doesn’t come along very often.