How did Randall's Food & Drugs become one of the largest regional supermarket chains in the US with stores in only a few areas of a single state? By locating them all in the big state of Texas. Known for offering slightly upscale shopping in wealthier neighborhoods, all of its stores are located in three of Texas' four biggest markets: Austin, Dallas/Fort Worth, and Houston. The grocer, which is owned by supermarket giant Safeway, runs some 110 stores under the name Randall's in Houston and Austin and Tom Thumb in the Dallas/Fort Worth metro area. Most stores are combination food stores and drugstores. The company also runs gas stations adjacent to stores in several cities.
While spilt milk isn't worth crying over, spilt market share has made Randall's and parent Safeway both a little teary. Tom Thumb and Randall's once led Dallas and Houston, respectively, in market share, and Randall's had the #2 spot in Austin. However, competition from supermarket giants Kroger and Wal-Mart Supercenters has demoted the company into third place in Big D and Houston. Randall's is now also ranked third in Austin (where Texas-based H.E. Butt Grocery is #1, with more than four times Randall's market share). The steep decline in market share (from 20% in 1999 to less than 11% today) has led to speculation that Safeway will eventually sell Randall's and abandon the competitive Texas market.
To hang on to market share and respond to demand for lower prices from strapped consumers the Texas chain finally followed its parent company's lead in 2009 by adopting Safeway's everyday-low-prices strategy. It was among the last of Safeway's many chains to do so. The company has also remodeled many of its stores to conform to Safeway's popular "lifestyle" format.
Short of selling the company, Safeway, which acquired Randall's in 1999, has responded by closing 26 underperforming Randall's stores in 2005. Safeway has also renovated many of the remaining stores to support higher-end merchandise, including natural and organic foods, full-service bakeries and meat counters, as well as sushi and olive bars.
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