The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE BAHAMIAN food retail market will ultimately be dominated by just three major players, AML Foods' chairman telling Tribune Business in the wake of Robin Hood's demise that consolidation was "inevitable".

Dionisio D'Aguilar said the surviving "components" would be Supervalue, AML Foods with its Solomon's SuperCentre and Cost Right formats, and the neighbourhood food store chains/Mom and Pop businesses, suggesting that the long-anticipated food retailing shake-out would also claim the struggling City Markets supermarket chain.

Adding that "the jury is still out" on the long-term future of another major player, Gladstone Road-based Phil's Food Services, Mr D'Aguilar said many entrepreneurs entered food retailing with the mistaken notion they would automatically earn huge profits.

The BISX-listed food retail group's chairman told Tribune Business many were attracted by the high sales volume food stores generated, but failed to realise only a minute percentage of this made its way to the bottom line. There were also numerous 'moving parts' in the industry, and unless all were working properly, a business would fail.

"A lot of people enter the market confused by what it takes to succeed in the food retail business," Mr D'Aguilar said. "It's quite a complicated business in that it has two components most businesses try to avoid.

"One is a lot of inventory, and one is a lot of labour, and unless you get that right you are destined to fail. You need people who have experience, and who have knowledge, and will not be confused by the large volume of sales.

"Food stores have a large number of sales, but don't have a large amount of profit; 3-5 per cent drops to the bottom line. You really need to know what you're doing to survive."

Asked who the likely survivors in the Bahamian food retailing landscape would be, Mr D'Aguilar replied: "At the end of the day, there will be three components to our food market. There'll be Supervalue, there'll be AML Foods with Solomon's and Cost Right, and the Mom and Pop stores on the corner - the neighbourhood food stores. The only one that the jury is still out on is Phil's."

He made no mention of the five-strong City Markets food store chain, which is owned by Sir Garet 'Tiger' Finlayson and his family, through their Trans-Island Traders vehicle. This indicates that Mr D'Aguilar, in common with many, believes that supermarket chain, too, will fall victim to consolidation forces in a market where too many retailers and too much product is chasing too few customers, who have less income to spend.

The Finlaysons, who took over a business driven into near-bankruptcy by the former BSL Holdings ownership, saw City Markets suffer a $16.587 million net loss prior to extraordinary items for the year to end-June 2011.

However, Trans-Island's principal, Mark Finlayson, gave every indication that the family intended on City Markets being around when he spoke to Tribune Business in the wake of Robin Hood's announced liquidation sale and closure.

"I'm not happy to see Robin Hood close," he said. "I was hoping he [Sandy Schaefer] would consolidate. The guy had a very good idea, it's just so congested in this market right now. It would have been nice if he got together with someone else.

"I'm not happy to see what has happened, but one way or another this market is going to consolidate and there will be fewer players left." Mr Finlayson had himself attempted to initiate this consolidation, with failed deals to acquire a majority of AML Foods' shares and buy Robin Hood's food retail business.

Tribune Business revealed on Friday how Robin Hood is set to imminently close its Tonique Williams-Darling Highway flagship store following a liquidation sale to offload $1 million in stock, its president, Mr Schaefer, saying the retailer had incurred a $3.6 million net loss in the past year.

He blamed this on the closure of Robin Hood's second store at Prince Charles Drive, which was hit by a combination of roadworks and failure to open in time to catch the 2010 Christmas shopping season. Some 65 jobs are set to be lost.

Mr D'Aguilar conceded this, telling Tribune Business: "He [Mr Schaefer] was very unlucky in the sense that he opened a brand new store, and the roadworks started. That must have cost him fortune, and was something very hard to recover from. And the comments by the Prime Minister were probably the final nail in the coffin."

That was a reference to a March 16, 2011, press conference at which Mr Ingraham said of Mr Schaefer: ""It is most regrettable that such a person has been allowed to have that type of business in the country. He is not a good person for the Bahamas." At the time, Mr Schaefer said he was "shocked and taken aback" by the Prime Minister's comments, and said he might leave the Bahamas as a result.

Still, Mr D'Aguilar said: "It was talked about and much discussed that there was to be some consolidation in the market. It's inevitable. It got a little overcrowded.

"It takes a certain amount of experience and a certain amount of skill to get that right. Everyone tends to dive into the food business, but once you get there it's a challenge to succeed, and only experienced people tend to get that right.

"You've got to buy right, order right and understand the labour component. Take Mr Roberts at Supervalue; it's only since City Markets' demise that he's done really well. It's only recently that his major competitor imploded and he was able to really succeed.

"Based on what's happened, people should be wary of this market. Unless you understand this business, open a gas station; it's much easier."