The W$J is reporting that Idaho grocer Albertsons Inc. is up for sale, and it appears that the most likely buyers are private equity firms, who are keen on Albertsons' real estate holdings. After driving Kmart to its knees, Wal-Mart is now doing the same to traditional grocery chains. According to the report in the W$J, "Wal-Mart and other discounters are grabbing the bottom of the market, while Whole Foods Market Inc. and other upscale chains siphon off a small but lucrative batch of customers at the top."

This is a good thing for consumers. Wal-Mart bested Kmart through superior performance, and it is doing the same thing in the grocery business. Look at this report from February 2004:

Most retailers pull in sales data from their "point-of-sale system"—once known as cash registers—at the end of the day or twice a day. Wal-Mart pulls in sales from its electronic registers every 15 minutes. By 4 a.m. each morning, suppliers can see how their products sold the day before in every Wal-Mart store around the globe. [S]ome suppliers are also allowed to see what other products were purchased by the consumer along with their own. The system is anchored by a Teradata warehouse that stores 200 trillion numbers and letters—the largest digital library of any company in the world.

And Wal-Mart never stands still. It is pressing ahead with what it believes will be its next big advantage, radio-frequency identification technology. All suppliers will be required to put radio tags containing electronic product codes on pallets and cases by the end of 2006.

As a result, Wal-Mart has been able to continually lower prices in the grocery aisles while maintaining a consistent profit margin. It's a recipe that could spell disaster for Albertsons.

Prescient.

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