🛒 Kroger-Albertsons Merger: Northwest, Rockies, & Alaska Impact

[storewanderer]

I think Kroger should be willing to divest Fred Meyer "Marketplace" stores, which are under 100000 sqft.

I've heard the original Haggen is pretty much the closest thing the PNW has to Wegmans. Beautiful stores. This is totally different from the Haggen that took expansion steroids.

There are relatively few of those 100k square foot size Fred Meyer Marketplace units. There are a few out there that feel closer to 80k square feet.

For all we know if C&S was given the choice between a 100k square foot Fred Meyer Marketplace that currently does $1 million a week in sales or a 50k square foot Safeway that does $600k a week in sales, they did this analysis:
1. We have no clue how to merchandise 100k square feet
2. Fred Meyer is a semi-discount format and we cannot match its pricing, we will be lucky to keep 75% of Fred Meyer's volume and there is a real risk we will lose 50% of their volume.
3. If we lose 50% of the volume that 100k square foot store is no longer viable and we won't be able to turn a profit
4. We better just try to buy the Safeway- already a smaller footprint, very high priced so pricing will be more similar to how C&S pricing is, etc.

[babs]

I think Kroger should be willing to divest Fred Meyer "Marketplace" stores, which are under 100000 sqft.

I've heard the original Haggen is pretty much the closest thing the PNW has to Wegmans. Beautiful stores. This is totally different from the Haggen that took expansion steroids.

There are relatively few of those 100k square foot size Fred Meyer Marketplace units. There are a few out there that feel closer to 80k square feet.

For all we know if C&S was given the choice between a 100k square foot Fred Meyer Marketplace that currently does $1 million a week in sales or a 50k square foot Safeway that does $600k a week in sales, they did this analysis:
1. We have no clue how to merchandise 100k square feet
2. Fred Meyer is a semi-discount format and we cannot match its pricing, we will be lucky to keep 75% of Fred Meyer's volume and there is a real risk we will lose 50% of their volume.
3. If we lose 50% of the volume that 100k square foot store is no longer viable and we won't be able to turn a profit
4. We better just try to buy the Safeway- already a smaller footprint, very high priced so pricing will be more similar to how C&S pricing is, etc.

Those Fred Meyer marketplace stores are some of their best stores. For instance the Burlingame store is the store with the highest sales per sq ft in the entire chain and likely near the top in all of Kroger. The other locations perform well too. Why would you dump those when there are nearly by Safeway or Albertsons stores doing a fraction in sales.

[ClownLoach]

I think Kroger should be willing to divest Fred Meyer "Marketplace" stores, which are under 100000 sqft.

I've heard the original Haggen is pretty much the closest thing the PNW has to Wegmans. Beautiful stores. This is totally different from the Haggen that took expansion steroids.

There are relatively few of those 100k square foot size Fred Meyer Marketplace units. There are a few out there that feel closer to 80k square feet.

For all we know if C&S was given the choice between a 100k square foot Fred Meyer Marketplace that currently does $1 million a week in sales or a 50k square foot Safeway that does $600k a week in sales, they did this analysis:
1. We have no clue how to merchandise 100k square feet
2. Fred Meyer is a semi-discount format and we cannot match its pricing, we will be lucky to keep 75% of Fred Meyer's volume and there is a real risk we will lose 50% of their volume.
3. If we lose 50% of the volume that 100k square foot store is no longer viable and we won't be able to turn a profit
4. We better just try to buy the Safeway- already a smaller footprint, very high priced so pricing will be more similar to how C&S pricing is, etc.

Those Fred Meyer marketplace stores are some of their best stores. For instance the Burlingame store is the store with the highest sales per sq ft in the entire chain and likely near the top in all of Kroger. The other locations perform well too. Why would you dump those when there are nearly by Safeway or Albertsons stores doing a fraction in sales.

There is no way that a single Fred Meyer unit is divested, and C&S isn't capable of operating one. I'll bet Kroger is going to argue tooth and nail that they're not grocery stores but "multi department stores" and thus should not be considered as direct competition subject to divestiture. I think they're going to be "willing to concede" and dump every Safeway/Albertsons that are right next to a FM, which is surprisingly common, and sell them off since they're making a tiny fraction of the sales of these giant FM's that have 36 staffed registers all with long lines during prime time hours. Then they dump nearly all of QFC except for the few gems, and keep all the lower format but highly profitable rural Safeways throughout the Northwest. The only other oddball idea I can think of would be for Kroger to somehow offer to split up some of the lower volume FM's, maybe say they''ll split it and operate the GM side as a standalone store while C&S can take the grocery side? But based on the layout of many of the stores that are "bookended" with apparel at one end and GM at the other that wouldn't be physically possible without massive remodeling expense. I doubt there are any FM's that do less than a million a week, maybe some extreme remote locations (Tillamook?). But "average" stores like Grand Central in Vancouver, WA have got to be bringing in between $2M and $3M a week, and "busy" stores more than that.

[ClownLoach]

The issue I see is that they'll have to either divest all the Fred Meyer stores in Bellingham, or most/all of the Haggen stores. Since we know the FM stores aren't going to be sold, that means Haggen loses its hometown where the brand and format are at its best. At that point I have to think they'll have to make a side deal to sell the entire Haggen chain because it does have a good reputation up there, people love those stores in NW Washington. My guess is they're going to try to get away with just offering up the Safeway for sale but that probably won't get past the regulators. It would be sad to see the brand go away because of that merger. Anywhere that the brand has baggage isn't a key area for them anyway. They love it in Bellingham.

I think Kroger should be willing to divest Fred Meyer "Marketplace" stores, which are under 100000 sqft.

I've heard the original Haggen is pretty much the closest thing the PNW has to Wegmans. Beautiful stores. This is totally different from the Haggen that took expansion steroids.

I feel like the construction of the store interiors is a little odd and dated, differing ceiling heights and some partition walls that are "off" plus weirdness like deli and bakery in the front of the store, but you are correct in saying that they are the closest thing to Wegman's. ACI seems to have given them some investment to brighten things up and minimal direction otherwise so they're running nicely. I could see some Haggen influence in that new La Jolla Pavilions in that they had really overhauled the bakery assortment; I could drive down there right now to get more of that amazing Sourdough bread which is amongst the best I've ever had in my life and I'm a Sourdough connoisseur. Can't believe it came from a Pavilions with the perfect balance of sour and the crispy, crunchy bubbly crust, it is decadent. I think the meat department also had similarities in the bringing in multiple seafood vendors and branding each case. I didn't really look at the deli. There is zero resemblance between the aborted expansion Haggen and the original.

[ClownLoach]

Just thought about Harris Teeter and Haggen. Looked at pictures of a few HT stores; very similar to Haggen in the quality of perimeter, visual appearance of the stores etc. Looks nothing like a Kroger operation. If they can maintain HT operations as is then they theoretically could run Haggen the same way if they could hold onto the stores. I would just hate to see Haggen scrapped and thrown aside for the purpose of pushing this merger through.

[rwsandiego]

...I could see some Haggen influence in that new La Jolla Pavilions in that they had really overhauled the bakery assortment; I could drive down there right now to get more of that amazing Sourdough bread which is amongst the best I've ever had in my life and I'm a Sourdough connoisseur. Can't believe it came from a Pavilions with the perfect balance of sour and the crispy, crunchy bubbly crust, it is decadent....

Did you notice whether the sourdough came from Sadie Rose Bakeries? They have an excellent product. One of the things I miss about San Diego, TBH.

[ClownLoach]

...I could see some Haggen influence in that new La Jolla Pavilions in that they had really overhauled the bakery assortment; I could drive down there right now to get more of that amazing Sourdough bread which is amongst the best I've ever had in my life and I'm a Sourdough connoisseur. Can't believe it came from a Pavilions with the perfect balance of sour and the crispy, crunchy bubbly crust, it is decadent....

Did you notice whether the sourdough came from Sadie Rose Bakeries? They have an excellent product. One of the things I miss about San Diego, TBH.

Nope, it was actually in house baked. They have a completely unique program at that store. Unfortunately I arrived very late and the department was closed, I would have loved to ask about how they're doing this as it had to be scratch made versus the frozen dough or brown and serve stuff sold at other stores.

I like a very strong sourdough flavor, and I prefer the glossy bubbled crust versus the current trendy "rustic" style. For a regular brand on a shelf I always pick up a few loaves of Brian's when I am up in the Central Coast area, it has that great tangy sourdough flavor and freezes well. The tangy sour taste is what I'm addicted to, and it was perfect in this Pavilions bread. Wherever they got their sourdough starter from, they have a winner.

[storewanderer]

...I could see some Haggen influence in that new La Jolla Pavilions in that they had really overhauled the bakery assortment; I could drive down there right now to get more of that amazing Sourdough bread which is amongst the best I've ever had in my life and I'm a Sourdough connoisseur. Can't believe it came from a Pavilions with the perfect balance of sour and the crispy, crunchy bubbly crust, it is decadent....

Did you notice whether the sourdough came from Sadie Rose Bakeries? They have an excellent product. One of the things I miss about San Diego, TBH.

Nope, it was actually in house baked. They have a completely unique program at that store. Unfortunately I arrived very late and the department was closed, I would have loved to ask about how they're doing this as it had to be scratch made versus the frozen dough or brown and serve stuff sold at other stores.

I like a very strong sourdough flavor, and I prefer the glossy bubbled crust versus the current trendy "rustic" style. For a regular brand on a shelf I always pick up a few loaves of Brian's when I am up in the Central Coast area, it has that great tangy sourdough flavor and freezes well. The tangy sour taste is what I'm addicted to, and it was perfect in this Pavilions bread. Wherever they got their sourdough starter from, they have a winner.

NorCal Safeway units scratch bake sourdough and stores that get it right get it just how you describe with the bubbles and with a very deep, tangy sourdough flavor. There is a process they are supposed to follow to make the dough, I think sometimes the process may not be followed so the result isn't good. I often get rubbery loaves, it is very disappointing. My favorite is the Sourdough Round. This is just the stock Safeway French Bread program. Some stores have started to put the loaves into a plastic bag (which suffocates the crust, makes the bread rubbery, and seems to impact the flavor) and give them a 3 day shelf life vs. the old process of only selling stuff the same day it was made and placing it into a paper bag that is open so it can breathe, and making it multiple times per day.

Some Vons have that scratch sourdough and others use a frozen dough, it depends on the size of the store/bakery. Most Albertsons still use frozen dough.

Haggen also has/had a very excellent Sourdough.

[storewanderer]

Just thought about Harris Teeter and Haggen. Looked at pictures of a few HT stores; very similar to Haggen in the quality of perimeter, visual appearance of the stores etc. Looks nothing like a Kroger operation. If they can maintain HT operations as is then they theoretically could run Haggen the same way if they could hold onto the stores. I would just hate to see Haggen scrapped and thrown aside for the purpose of pushing this merger through.

Haggen has a much better perimeter than HT (especially produce and bakery) but it also comes at a higher price.

We will see what happens to HT after the 10 year anniversary of it being bought by Kroger occurs. I don't know if anything is going to happen at that point or not.

HT has its own buying, still has Topco handling much of its private label, own distribution, own systems, etc. It is possible Safeway could be handled this way.

Haggen has very limited buying of its own occurring and a small warehouse, is fully on Signature brands, Safeway distribution, Safeway systems, etc.

[rwsandiego]

...I could see some Haggen influence in that new La Jolla Pavilions in that they had really overhauled the bakery assortment; I could drive down there right now to get more of that amazing Sourdough bread which is amongst the best I've ever had in my life and I'm a Sourdough connoisseur. Can't believe it came from a Pavilions with the perfect balance of sour and the crispy, crunchy bubbly crust, it is decadent....

Did you notice whether the sourdough came from Sadie Rose Bakeries? They have an excellent product. One of the things I miss about San Diego, TBH.

Nope, it was actually in house baked. They have a completely unique program at that store. Unfortunately I arrived very late and the department was closed, I would have loved to ask about how they're doing this as it had to be scratch made versus the frozen dough or brown and serve stuff sold at other stores.

That's great to hear. It doesn't surprise me, given the store is located in "downtown" LaJolla. (Side note: LaJolla Village Square and UTC like to think of themselves as "LaJolla," but they aren't. That is University City.)

I like a very strong sourdough flavor, and I prefer the glossy bubbled crust versus the current trendy "rustic" style. For a regular brand on a shelf I always pick up a few loaves of Brian's when I am up in the Central Coast area, it has that great tangy sourdough flavor and freezes well. The tangy sour taste is what I'm addicted to, and it was perfect in this Pavilions bread. Wherever they got their sourdough starter from, they have a winner.

I'm with you on the sourdough bread. The "rustic" crust just isn't sourdough to me. Next time I am in San Diego I'll have to stop in and pick up a couple of loaves.

Let's hope the merged entity (if there is one - fingers crossed that it doesn't happen) retains niche products like this.