Albertsons 2006 Annual Report Download - page 15

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All of these industry factors impact our food distribution customer base. As a result, we continue to
experience customer attrition in our supply chain services operations. The attrition rate in fiscal 2006 was
approximately five percent, which is above the historical range of approximately two percent to four percent, due
primarily to the impact of cycling of three large customer transactions to other suppliers in the prior year.
All the above factors will continue to impact our industry and our company in fiscal 2007.
We believe we can be successful against this industry backdrop with our regional retail formats that focus
on local execution, merchandising and consumer knowledge. In addition, our operations will benefit from our
efficient and low-cost supply chain and economies of scale as we leverage our retail and supply chain services
operations. Save-A-Lot, our extreme value format, has nationwide potential, and currently operates in 39 states.
We plan to expand regional retail banner square footage through selective new store growth in key markets
where we have significant market share. The Proposed Transaction will significantly expand our retail presence
and the number of stores we operate. In addition, we will supplement regional retail store growth with continued
focus on remodel activities. Given the life cycle maturity of our supply chain services business with its inherent
attrition rate, future growth in food distribution will be modest and primarily achieved through serving new
independent customers, net growth from existing customers and further consolidation opportunities.
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