[CONFIRMED] Albertsons FL converting to Safeway

Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee. No non-grocery posts.
pseudo3d
Posts: 3851
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by pseudo3d »

storewanderer wrote:Safeway may have realized what you have previously pointed out, that food prices in FL tend to be higher than the rest of the South (why? no Kroger...) so there is no reason to price Florida Stores with Texas pricing when they can get Eastern Division pricing on them.
I haven't read up on the causes of Florida's higher prices, but I imagine it's something a bit more along the lines of higher costs of living and various laws and quirks that cause grocery prices to go higher, much like Louisiana has the thing with the milk. If Walmart can't destroy the market with lower prices then Kroger (even a better run division than Atlanta) cannot either.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by storewanderer »

As has been pointed out on this board by Veteran+, the situation in Florida is Publix and Wal Mart control that grocery market. As a result the prices are higher than surrounding states which often have 3 competitors.

I would say Wal Mart did destroy the market with lower prices. They sent Albertsons packing, Delhaize packing, Winn Dixie is very crippled, and who is left is now Wal Mart and Publix and there is less need to compete on price when it is only the two of them in so many areas in that state.

The more competition there is, the better the prices will be. When there are fewer competitors they can decide what they want to sell what items for and they can undercut each other but when there are only two parties playing that game the prices will not go as low, and not on as many items, as if there were a few more parties all playing it out and being very competitive on different items in hopes to draw customers in.

I suspect places where HEB and Wal Mart are the only two players in Texas also have higher grocery prices than places like DFW or Houston where there is more competition. I would be interested to see that actually.
pseudo3d
Posts: 3851
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by pseudo3d »

storewanderer wrote:As has been pointed out on this board by Veteran+, the situation in Florida is Publix and Wal Mart control that grocery market. As a result the prices are higher than surrounding states which often have 3 competitors.

I would say Wal Mart did destroy the market with lower prices. They sent Albertsons packing, Delhaize packing, Winn Dixie is very crippled, and who is left is now Wal Mart and Publix and there is less need to compete on price when it is only the two of them in so many areas in that state.

The more competition there is, the better the prices will be. When there are fewer competitors they can decide what they want to sell what items for and they can undercut each other but when there are only two parties playing that game the prices will not go as low, and not on as many items, as if there were a few more parties all playing it out and being very competitive on different items in hopes to draw customers in.

I suspect places where HEB and Wal Mart are the only two players in Texas also have higher grocery prices than places like DFW or Houston where there is more competition. I would be interested to see that actually.
Walmart didn't really affect Albertsons directly, I think, as I think Albertsons really was in a bad shape by that time due to their over expansion and other factors. Many of the stores they sold to Publix (the 49) were profitable and mostly so Albertsons LLC could pay down debt.

As far as competition goes, I don't think a lot of stores makes a huge difference (I have to laugh at "Florida is expensive because no Kroger", because that's absolutely not true in any case). The cost of foodstuffs in San Antonio (dominated by H-E-B with a few Whole Foods and alternate grocers) is slightly less than Houston. You could argue that there's more expensive grocery stores throwing off the average, and that may be true, but looking at ads, it's clear that H-E-B can do low prices even when they're mostly the only game in town. Sweet corn at $6 for one? 50¢ for a red bell pepper?

So either one of two things is going on:

1) Publix has grotesquely high prices and Walmart is reaping major profits by undercutting them slightly
2) Florida just has a high cost of living and it wouldn't matter if Kroger and Safeway were running a three-way race. After all, the food prices for Tampa are much higher than Texas and we know who's running the grocery show there.

I'm also pretty sure that the stores do not have a uniform pricing structure going through the division, either...
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by storewanderer »

Publix won't have any 6 for $1 corn and you'll be hard pressed to find any loss leader meat specials either. You'll find a lot of fair prices on items but not much that will make you want to run to go stock up. Some of their buy one get one free promotions are good deals (when the regular price is reasonable; this is a real variable by item). So I think you are correct, Wal Mart is reaping significant profits there by slightly undercutting Publix (just like my example of how they do that with a smaller Nevada town with Safeway as the only competitor and price higher than their other locations a half hour away who have different/lower priced competition).

Kroger's pricing strategies have kept Wal Mart in check in a serious way in many markets. They absolutely help to hold Wal Mart's prices down. Their aggressive sale pricing also forces Wal Mart to come down on a lot of prices. WinCo is another one that has a serious impact on Wal Mart's pricing.

Oklahoma is another market I can think of where the market is controlled by Associated Wholesale supplied Stores that run fairly similar pricing/promotions and Wal Mart and the prices at Wal Mart in Oklahoma are higher than Wal Marts in California (which compete directly with WinCo). There is a reason why WinCo decided to go to Oklahoma. Cheap entry and easy pickings. It will be very good for Oklahoma to get a third chain.
veteran+
Valued Contributor
Valued Contributor
Posts: 2233
Joined: January 3rd, 2015, 7:53 am
Has thanked: 1203 times
Been thanked: 71 times
Status: Online

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by veteran+ »

storewanderer wrote:Veteran, When I was in the stores a month and a half ago their prices on staple items like eggs, butter, etc. were slightly less than Publix (like 10 cents less for private label items). The other packaged goods were all priced higher than Publix throughout the store and there weren't many items on special beyond what was on ad. This pricing was clearly Safeway pricing, not Albertsons pricing. The produce was generally priced lower than Publix but not by much (not like a Sprouts price structure that would draw people in). Also adding features like a large natural foods department and Starbucks I don't think is catering to a Stater-like customer. My impression is Albertsons vision for the Florida Safeways was to be an upscale operation based on what they did and how they did it. I will agree with you that they will never be able to overtake Publix and Publix has a good lock on this market. Winn Dixie is asleep at the switch and if they were smart they would be, as you say, going after those customers who want an affordable decent quality store to shop in. They could easily pick customers off of Wal Mart. Kroger has demonstrated that with some good specials and a lot of key item prices within 5% of Wal Mart it is very easy to pick off the Wal Mart customers. They will pay 10-20% more but they won't pay double like Safeway/Albertsons seems to think. Wal Mart is easy pickings over the past few years as they have upped their grocery prices and it is about to get even easier as they discontinue the price matching program (ironically Florida seems to be the most concentrated market where they are discontinuing it).

But now that the stores are in Eastern Division, who knows how that will impact pricing. I would assume the Eastern Division has a higher price scale than the Texas Division? Safeway may have realized what you have previously pointed out, that food prices in FL tend to be higher than the rest of the South (why? no Kroger...) so there is no reason to price Florida Stores with Texas pricing when they can get Eastern Division pricing on them.

These companies are really keen on price. To give you another idea. Up here in Reno and also in Carson City and Fernley, Wal Mart sells dozen large eggs at all stores for $1.14. Why? To try and get close to WinCo's price of $1.05 (though WinCo only operates 2 stores in Reno in this market). The other competitors in Reno have various prices (Safeway 3.59 and then 2.99 sale, Raleys 1.98, Save Mart 1.98, Scolaris 1.79, Smiths 1.59). Go out to Fallon, NV (which is 30 minutes from Fernley, NV where Wal Mart's only competitor is Scolaris) where Wal Mart's only public competitor is Safeway (featuring the $3.59/2.99 card price eggs) and suddenly their dozen egg price jumps to $2.20.

Thank you so much for your observations and assessments.

If Safeway continues down this avenue the destination will be Perdition. I know this market very well and there is no room for another Publix (of any iteration).

The market in between Publix and Walmart is not being served. When Albertsons was at its strongest their prices were slightly below Winn Dixie (W/D was still asleep at the wheel). Albertsons prices were much lower (comparatively) than Albertsons in other States like California.

The price issue in Florida is mostly due to not enough competition.
veteran+
Valued Contributor
Valued Contributor
Posts: 2233
Joined: January 3rd, 2015, 7:53 am
Has thanked: 1203 times
Been thanked: 71 times
Status: Online

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by veteran+ »

pseudo3d wrote:
storewanderer wrote:Safeway may have realized what you have previously pointed out, that food prices in FL tend to be higher than the rest of the South (why? no Kroger...) so there is no reason to price Florida Stores with Texas pricing when they can get Eastern Division pricing on them.
I haven't read up on the causes of Florida's higher prices, but I imagine it's something a bit more along the lines of higher costs of living and various laws and quirks that cause grocery prices to go higher, much like Louisiana has the thing with the milk. If Walmart can't destroy the market with lower prices then Kroger (even a better run division than Atlanta) cannot either.
It has more to do with a 100% pro-business and commerce State government. There is a general lack of competition in Florida in retail grocery and many other areas of business. Regulations for business are scant and lightly enforced. The "price" for this environment is paid for by the consumer (high prices) and employee (low wages).

Florida is still a good place to get your money's worth when Buying a home and of course no income tax helps but that is it. Groceries are more, electricity is more, auto insurance is more, even dry cleaners and car washes are more, rent is about the same as (comparatively) some big cities on the west coast.

BTW, transportation costs are slightly higher.
pseudo3d
Posts: 3851
Joined: November 12th, 2015, 7:01 pm
Has thanked: 5 times
Been thanked: 77 times
Status: Offline

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by pseudo3d »

veteran+ wrote:
pseudo3d wrote:
storewanderer wrote:Safeway may have realized what you have previously pointed out, that food prices in FL tend to be higher than the rest of the South (why? no Kroger...) so there is no reason to price Florida Stores with Texas pricing when they can get Eastern Division pricing on them.
I haven't read up on the causes of Florida's higher prices, but I imagine it's something a bit more along the lines of higher costs of living and various laws and quirks that cause grocery prices to go higher, much like Louisiana has the thing with the milk. If Walmart can't destroy the market with lower prices then Kroger (even a better run division than Atlanta) cannot either.
It has more to do with a 100% pro-business and commerce State government. There is a general lack of competition in Florida in retail grocery and many other areas of business. Regulations for business are scant and lightly enforced. The "price" for this environment is paid for by the consumer (high prices) and employee (low wages).
That is absolutely not why Publix is more expensive, unless Publix and other grocery stores are running a conspiracy. Texas is also very pro-business and has very low grocery prices at least compared to Florida. A gallon of store brand milk and a dozen eggs (also store brand) are $2 each in Houston. For comparison, Walmart, Publix, Sweetbay (back when Sweetbay was still extant), and Winn-Dixie ALL had a gallon of milk at $4 in January 2014.

Also, the whole "Eastern pricing" is ridiculous, because although Safeway's prices are generally higher than competitors, they do price in market. Like I said before, bananas are 48 cents a pound in both Randalls and H-E-B. Barring some massive loss-leader sale, you can't go a whole lot lower than that.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by storewanderer »

Many companies do this. Why is a half gallon of milk at Safeway NorCal $2.99 and a dozen of eggs $3.59 there and a pound of butter $4.99 there (all store brand)?

Yet if you cross up to Oregon or go next door to Arizona and visit a Safeway, I suspect the items all cost about 40% less. Is it really that much more expensive to do business in California than Oregon or Arizona? Not that much more expensive. But Kroger and WinCo are there in Oregon and Kroger and Wal Mart are there very heavily in Arizona and aren't allowing this type of pricing.

By comparison the competition in NorCal, the two competitors with more than a few competing locations, Raleys and Save Mart, are content with this price structure each pricing their items a little bit below Safeway but nobody getting into any price wars because there is no motivation and they all know it.

The same thing is going on in Florida. These places will charge what the market will tolerate/pay. In Texas there have been more competitors playing the "race to the bottom" on price than in places like Florida and the prices are lower accordingly.
veteran+
Valued Contributor
Valued Contributor
Posts: 2233
Joined: January 3rd, 2015, 7:53 am
Has thanked: 1203 times
Been thanked: 71 times
Status: Online

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by veteran+ »

pseudo3d wrote:
veteran+ wrote:
pseudo3d wrote:
I haven't read up on the causes of Florida's higher prices, but I imagine it's something a bit more along the lines of higher costs of living and various laws and quirks that cause grocery prices to go higher, much like Louisiana has the thing with the milk. If Walmart can't destroy the market with lower prices then Kroger (even a better run division than Atlanta) cannot either.
It has more to do with a 100% pro-business and commerce State government. There is a general lack of competition in Florida in retail grocery and many other areas of business. Regulations for business are scant and lightly enforced. The "price" for this environment is paid for by the consumer (high prices) and employee (low wages).
That is absolutely not why Publix is more expensive, unless Publix and other grocery stores are running a conspiracy. Texas is also very pro-business and has very low grocery prices at least compared to Florida. A gallon of store brand milk and a dozen eggs (also store brand) are $2 each in Houston. For comparison, Walmart, Publix, Sweetbay (back when Sweetbay was still extant), and Winn-Dixie ALL had a gallon of milk at $4 in January 2014.

Also, the whole "Eastern pricing" is ridiculous, because although Safeway's prices are generally higher than competitors, they do price in market. Like I said before, bananas are 48 cents a pound in both Randalls and H-E-B. Barring some massive loss-leader sale, you can't go a whole lot lower than that.
I beg to differ and we should just agree to disagree.

I lived in Florida for long periods of time. I began my grocery career there. Most of my family still lives there. I believe my experience with Florida is robust.

Plus, I did not intimate that the 100% pro-business milieu was the Only reason.

:-)
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: [CONFIRMED] Albertsons FL converting to Safeway

Post by storewanderer »

It appears they are now offering Just for You and have what look like grand opening specials ($10 off $50, 99 cent chips and hot dogs... would have made a lot more sense as promotion items last week for Memorial Day than this week but what do I know)?
Post Reply