Randall’s Going Out of Business Sale in Sugar Land and Why This Time It’s a Little Bit Different

Howdy folks, and welcome to Houston Historic Retail. Let me offer you a short introduction, as many people will likely find this via Google or Facebook (normal readers just play along). The following is a “Photo Essay”. It’s not meant to answer exactly why the Randall’s in Sugar Land is closing. However, it should offer some insight into how Randall’s got into the shape it is today. If you have an interest in this type of content or Retail News like when HHR broke the story that this location was going to close? Check us out on Facebook for regular updates!

It’s 2022 and Randall’s is still hanging on by a thread in Houston, as of this blog posting, there are only 16 remaining locations. A far cry from the 70+ concurrent locations, the chain offered at its heights in the 90s. Once the Sugar Land location closes, the chain will be down to a paltry 15 stores, so let’s start off where Randall’s “went wrong”. Depending on whose side you take, it could be as far back as the Tom Thumb Merger, or as recent as the Albertson’s buyout, but I think it falls right around the Safeway purchase. For many years, before really examining the story of Safeway in Houston, and how AppleTree could have been successful, I always assumed that Safeway had made a foolish decision by reentering Houston. Initially, I thought that Safeway had cut Houston because it was a low performer. Little did I know, that an attempted hostile takeover had left Safeway with investment firm owners, that were simply looking for quick cash. Safeway was a successful company, simply overextended, and the Houston division was no different. With somewhat fond memories of the Houston division in their minds, it was likely easy for Safeway to justify their purchase of Randalls in 1999. The last time the Californians had been in the area, grocery wars had pitted the Randalls and Safeway against each other. When Randall’s rebooted in 1966 its new concept was simply a “Discount Supermarket”. A rather no-frills experience compared to what Safeway would offer when they entered Houston in 1970. Randall’s would leave the discounter image behind, after acquiring a few Handy Andy stores which would become the model for the Flagship concept. This Sugar Land store helped to prove that the larger more elaborate stores could be successful in developing suburbs.

In the years following Safeway’s exit the Houston grocery market was a bit of a mess. One of the largest “messes” was the pivot of AppleTree. Despite what I previously said about their ability to find success, it should be noted that the 104 location chain, spun off from Safeway, as a clone of their parent company’s operations was not a success. Rather, I’m talking about the reduced 50 store version, that appeared around 1990. What AppleTree had done, was convert themselves from a Safeway clone into something more resembling a pared-down Weingarten. A medium-sized local chain with flexibility, and convenience. Randall’s would use this drastic change in the market to its advantage, expanding their store count and quickly becoming the second-largest grocer in Houston only behind Kroger. Another mess of the Houston grocery scene at the time was the flood of “discount groceries” whether it was Food Lion, Wal-Mart expanding into Supercenters, or even HEB Pantry Foods, discounters flooded the Houston grocery market. While Randall’s had initially gone the route of a discounter, the Flagship era had brought higher prices, which could somewhat be abated with the use of a Remarkable Card, and while the discounters were prominent few were actually full-size supermarket operations. By the late 90s, things in Randall’s land were still looking up, new stores were being planned, emphasis was being placed on modernizing their stores, and plans were even drawn up for Randall’s to open a store adjacent to downtown making them the first chain grocer to return to the area since the exit of Weingarten. In 1997, the Onstead family would sell majority ownership of their company to investment firm KKR. The firm had been one of the deciding factors in cutting off the Houston Divison of Safeway and was suddenly in the Houston grocery market again.

Randall’s was purchased by KKR during a frenzied expansion of the firm. Many of the companies purchased by KKR during this time would not last, often finding themselves in bankruptcy, or passed on to new ownership. Randall’s was no exception and in 1999 plans were made for Safeway to purchase the grocery chain from KKR. The years of Randall’s under the investment firm saw a continuous growth in sales, thanks in large part to a continued expansion program. Safeway seemed to be banking on the purchase of Randall’s being their key to regaining status as a national grocer. They even promised to keep preset expansion plans in place for the next year, however, beyond this point, Randall’s would begin to be reined in. It seemed that Safeway was either unaware or underestimating the competition in the Houston market. With Wal-Mart’s Supercenter conversion plan in place, Randall’s was quickly losing market share. While they still had more locations, the lower prices, and early on much nicer Super Center grocery departments began to pull many grocers away. By the turn of the century, Randall’s would also find themselves with two new competitors, Albertsons, and HEB. Both chains had been circling the Houston area for years in advance but had steered clear of the Weingarten, Kroger, and Safeway days. Once only Kroger remained, both chains began a direct strike into Houston. Both airing on the side of caution building smaller stores at first, but expanding by the end of the decade to stores that would easily rival a Flagship Randall’s. All things considered, this was the beginning of the end for Randall’s.

The early 2000s would see a series of compromises between Safeway and Randall’s, not the least of which would involve finding a new CEO as Robert “Randall” Onstead Jr. would depart the company shortly after its sell-out. Onstead would later go on to briefly serve as CEO of Garden Ridge slightly prior to their bankruptcy, among many other companies all seemingly on the brink of failure. For the first time in years, Randall’s had an unsure footing. Safeway seemed intent to let the chain run on its own, but without good internal guidance, the stores somewhat stalled beyond what Onstead had already helped plan. Around 2002, without a clear future in sight, the silent lobotomization of Randall’s became apparent, as Randall’s branded products were quietly swapped for Safeway branded private label products. Amid a massive backlash “Randall’s branded” products would return, however, these would quickly be swapped again this time for Safeway-made products branded as Randall’s. By this point, Safeway was beginning to erode what remaining brand loyalty Randall’s had. Selling themselves as true Texans, HEB stepped up to the plate with the development of their full-line stores in Houston during this time. Another major selling point was consistently low prices compared to Randall’s. While they couldn’t usually beat Wal-Mart, the small gap in price was worth a perceived step in quality.

With the realization that Randall’s was falling far behind its competitors, corporate support dropped off around 2003. One of the first indications of this was the abandonment of an Albertson’s conversion of their massive Highway 6 and West Airport Store, which would later become a Kroger. Safeway pulled the plug on this around the end of 2002, and it seems like the store never opened under the Randall’s banner, despite having some work done to it by the company. Eventually, by 2005, Randall’s had gone from being Safeway’s shining star to an unashamed failure. In 2005, Onstead was supposedly approached by Safeway to buy back the company, which he declined. Later that year the first wave of closures would begin. Rather than retreating at full speed like Safeway had the last time they were in Texas, they chose to crawl out, nursing their wounds, by selling off locations. In 2015, Safeway and Albertsons agreed to a merger, that would take place over the next two years. By 2017 Albertsons closed the remaining Houston offices and distribution center, in favor of operations out of their Albertsons offices in DFW. From that point forward, Randall’s has really just been a “brand name” for Albertsons, who were quite aware of the beating they received making their way into Houston a few years back. Over the next few years, locations would close, some being leased out to El Rancho, and many more simply sitting vacant.

Here’s why today’s Randall’s is different. While it’s not a perfect system stores deemed worth keeping are given a “refresh” bringing in new colors for the first time in 20 years. Stores not being kept generally don’t get a remodel. The only exceptions being locations like Bellaire, which were remodeled early on, but HEB has rebuilt nearby. The stores that did receive a remodel are usually isolated. The Sugar Land location is no exception, the closest mainline grocery stores are both a couple of miles away in either direction. Randall’s is on a bit of an island. Based on the Anonymous Source who tipped me off on the store’s closing, This location was always “just barely” meeting sales for the district, and was always unlikely to get a remodel. Except, in 2020 the exterior of the store was repainted in what looked like the start of a remodel. However, it wouldn’t come to pass, and the pandemic provided only a short extension on life, and when traffic died back down Albertsons lined up this location’s head to the chopping block. The closing of this grocery store has already upset many, what is to come of the space we have yet to see, but it won’t likely be another mainline grocer. It would be interesting to see Food Town give the space a go, but we will have to wait and see.

6 comments

  1. Any idea how the stores on Memorial (both of them) and Westheimer manage to stay open? They are all within a quick drive of either Kroger, HEB, or both, not to mention upscale grocers like Sprouts, Trader Joe’s, and Whole Foods.

    1. Good question, while I can’t give a definitive answer I believe I can provide a bit of insight into it. Yes, they are all in areas where a Kroger is a quick drive, but really the only HEBs anywhere near those Randall’s are the outdated the Westheimer and S. Kirkwood, and the notoriously busy Bunker Hill and I-10. They’re really on the outskirts of the areas, and not a destination for anyone who doesn’t have a car. As for how Randall’s can keep up against all the Kroger locations. In general, Randall’s has never had a hugely difficult time holding its own against Kroger. Both companies have a focus on sales, and coupons (although this has largely gone digital for both). Finally, with the upscale grocers, Sprout’s, Trader Joe’s, and Whole Foods, all suffer from a “lack of brand name” options. Whether it be intentional for health’s sake, or value-focused, not carrying things like Coca-Cola and Bounty Paper Towels will end up costing you more consumers than you think. Or at least, forcing a secondary trip to the other retailer.

      There’s no promise that these stores are doing exceptionally well, but they’re certainly holding their own. The Westheimer location is actually the “newest” Randall’s in Houston being rebuilt around 2011.

    2. I’ve been to both the Dairy Ashford & Memorial and the Town & Country Randall’s in recent times and both seem to do well. My best guess as to why these stores do well is that the more affluent shoppers in the neighborhoods near those stores appreciate the calmer store environment of the Randall’s compared to the nearby HEBs which are some combination of packed with customers, poorly designed, and just flat out ugly looking on the inside. The Memorial & DA Randall’s even outlasted the HEB at that intersection. The Kroger near there is an older location, like the Randall’s, but probably not as well maintained as the Randall’s.

      In my experience, the level of customer service at the two Memorial Dr. Randall’s is above average compared to other more suburban Randall’s locations. The T&C Randall’s is famous for playing rock/pop music and a lot of customers seem to appreciate that. Randall’s seems to know these locations are popular and they’re trying to keep it that way.

      Long story short, there are a lot of customers who aren’t particularly price sensitive in those areas and so they value the convenience and store environment of Randall’s to other options which are more downmarket, such as HEB, and others which have more limited items such as Trader Joe’s.

  2. I can totally understand why Onstead did not want to buy back the chain he once helmed; the chain was beyond the point of no return and probably felt it was better to let it die rather than put any effort to revive it. RIP Randall’s Sugar Land, you will be missed.

  3. There is a lot of good information here about the history of Randall’s. I do remember that in the mid-1990s or so, Randall’s and Kroger were in a bit of an arms race when it came to introducing premium quality store brands. Prior to that time, store brands only hoped to match the quality of national brands, but retailer started to try to convince shoppers that their store brands were even better than national brands. I do remember Randall’s Remarkable soda and President’s Choice. The latter wasn’t specific to Randall’s, but I guess they were the only place to get it in this area.

    While I think Randall’s store brands had a good reputation, I don’t know if people were super loyal to them. I think the problem with the Safeway branded products was not the quality of them or the quality of the previous Randall’s brand items, but rather that the Safeway branded products had the Safeway branding on them! The Safeway name had a bit of a reputation of a loser here locally even if the reason for Safeway’s departure in 1987 was not completely out of failure as you say. Still, the Safeway name was a bit tainted here because of that original departure and also of the failure of AppleTree. On top of all of that, there are always some Texans who associate Safeway with California and are automatically biased against them then.

    Although Randall’s got away with having slightly higher prices in the 1990s against the likes of Kroger and HEB Pantry Foods (Randall’s wasn’t really more expensive than Albertsons and at least Randall’s had higher quality service than Albertsons), it was harder for Safeway to sustain the high-price model in the 2000s against Kroger after they added many new stores (including the Krogertsons locations), full-line HEBs, and Wal-Mart. It was clear, and later confirmed by Randall Onstead himself, that Safeway seemed to favor the DFW Tom Thumb stores over the Houston Randall’s stores. Given the much-reduced competition from HEB in DFW and the fact that Kroger has a bit of a harder time in DFW than in Houston, it’s not hard to see why Safeway made that choice.

    As for the Sugar Land location itself, it’s a shame to see it go as I believe at least some of the Onsteads lived in Sugar Land or at least somewhere nearby in Ft. Bend County. At least Richmond will continue to have a Randall’s as that store just got a renovation. The Sugar Land location was like a lot of Houston-area Randall’s in that it got the somewhat micro-sized version of Lifestyle v2 decor since many old Randall’s locations have smaller sized walls. The age of the store can be seen somewhat in the older style dairy case doors and such. That said, this store probably aged much more gracefully than what the Sugar Land HEBs will look like when they get to the same age as this Randall’s store is now.

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