🛒 Kroger-Albertsons Merger: National Impact

[pseudo3d]

It's not just adding more stores, it's being a better operator. Albertsons, when it was adding more stores had a lot of issues in those days. Sure, it was fun to see the variety of stores they bought out and went into, doing "continuous" conversions (that is, remaining open without closing for a few days/weeks) of everything from Bruno's to Super 1, some interesting store design choices (some spectacular stores...but also some interesting conversions of other stores). Prices are still high and perishables could use work. While Albertsons hasn't really been much of an innovator the last interesting concept to their stores was building "Albertsons Market Street" in Idaho.

But the merger is still an issue: Kroger's stock jumped up with high profits and are continuing to fight the merger. Some knucklehead in Dallas thinks that the FTC issue "smacks of grandstanding" and also compares H-E-B to Publix which couldn't be farther from the truth. (Publix is MUCH more expensive than H-E-B, a recent survey of Blue Bell's banana-flavored ice pops in Louisville, when comparing them to Houston markets, is 10 cents more than Randalls and 60 cents more than H-E-B).

HEB has pretty strong pricing. I did notice a lot of variances in pricing between stores but for the most part HEB is a tough priced store and will absolutely go to battle over price. They are priced much stronger than Publix or Hy Vee- two chains that really do not go to battle over price.

Kroger's great profit earnings report and Target's great profit earnings report despite soft sales numbers. It is so obvious what is going on here with everyone complaining about inflation and all these record profit earnings reports showing up with soft sales numbers...

H-E-B is not far removed from a 1980s grocery warehouse style store (albeit one with better presentation), very limited deli offerings beyond slicing cold cuts, and a heavy reliance on store brand. Publix has better presentation, better deli, and other features, but also a higher price point. To compare the two as being more of the same is preposterous.

Mostly baseless speculation on my part: I've suspected Kroger had some issues before all this, but is Kroger trying desperately so hard to buy Albertsons as-is (without making any adjustments to divestments, etc.) and then blame the acquisition when the wheels are falling off from the company? In any other situation, Kroger should make some PR statement how it was giving up the merger and make the usual overtures about disappointment, then try to come up with an alternate plan, like only buying certain assets. Seems like the acquisition would provide a perfect cover for some accounting shenanigans.

[marshd1000]

It seems to be that this merger would have had a better chance if they had divested to other retailers? Like in California, divesting to Save Mart with a rebrand of the stores to Lucky. In Washington, Oregon, Idaho and Alaska, divesting QFC and Carr’s to URM, the owner of Rosauers would have made sense as would had Pattison Food Group or maybe even Loblaws, since they are coming into the states with its T&T Supermarkets? Or for just the Carr’s stores in Alaska, Alaska Commerical might be a good fit! Or how about Hy Vee taking stores in Colorado? It just seems to me that there could have been stronger choices for Kroger and Albertsons than C&S!

[storewanderer]

It's not just adding more stores, it's being a better operator. Albertsons, when it was adding more stores had a lot of issues in those days. Sure, it was fun to see the variety of stores they bought out and went into, doing "continuous" conversions (that is, remaining open without closing for a few days/weeks) of everything from Bruno's to Super 1, some interesting store design choices (some spectacular stores...but also some interesting conversions of other stores). Prices are still high and perishables could use work. While Albertsons hasn't really been much of an innovator the last interesting concept to their stores was building "Albertsons Market Street" in Idaho.

But the merger is still an issue: Kroger's stock jumped up with high profits and are continuing to fight the merger. Some knucklehead in Dallas thinks that the FTC issue "smacks of grandstanding" and also compares H-E-B to Publix which couldn't be farther from the truth. (Publix is MUCH more expensive than H-E-B, a recent survey of Blue Bell's banana-flavored ice pops in Louisville, when comparing them to Houston markets, is 10 cents more than Randalls and 60 cents more than H-E-B).

HEB has pretty strong pricing. I did notice a lot of variances in pricing between stores but for the most part HEB is a tough priced store and will absolutely go to battle over price. They are priced much stronger than Publix or Hy Vee- two chains that really do not go to battle over price.

Kroger's great profit earnings report and Target's great profit earnings report despite soft sales numbers. It is so obvious what is going on here with everyone complaining about inflation and all these record profit earnings reports showing up with soft sales numbers...

H-E-B is not far removed from a 1980s grocery warehouse style store (albeit one with better presentation), very limited deli offerings beyond slicing cold cuts, and a heavy reliance on store brand. Publix has better presentation, better deli, and other features, but also a higher price point. To compare the two as being more of the same is preposterous.

Mostly baseless speculation on my part: I've suspected Kroger had some issues before all this, but is Kroger trying desperately so hard to buy Albertsons as-is (without making any adjustments to divestments, etc.) and then blame the acquisition when the wheels are falling off from the company? In any other situation, Kroger should make some PR statement how it was giving up the merger and make the usual overtures about disappointment, then try to come up with an alternate plan, like only buying certain assets. Seems like the acquisition would provide a perfect cover for some accounting shenanigans.

Publix deli also has little offer beyond sliced cold cuts, sandwiches, and hot fried food. They do not have potato salad etc. by the pound; all is prepack OFF SITE (the stores do not handle any by the pound salads- think of all the labor that saves not having to do all those dishes, weigh all those little packages, clean all those serving spoons repeatedly all day). Publix deli program is basically like the Wal Mart deli program but with sandwiches, and higher quality products offered.

What "other features" are you referring to that Publix has that HEB does not have? I have spent a good amount of time in Publix Stores (more than I've spent in HEB Stores) and I cannot think of any such features. Publix has tiny produce and meat departments, very small service counter for meat/seafood (sort of boutique like), same for bakery very small department with a good variety but very little product out (again boutique like).

HEB piles it high... very high... in every department...

Publix also very heavily pushes store brand. But in my opinion (and someone who has extensive experience with both chains wants to disagree- please do so) their store brand mix/program is not nearly as extensive as HEB's store brand program and I am not sure on quality. I think HEB made a very good move to put the HEB name on more of its store brand items instead of that old Country Fair brand or whatever it was they used which looked extremely downscale.

[HCal]

It seems to be that this merger would have had a better chance if they had divested to other retailers? Like in California, divesting to Save Mart with a rebrand of the stores to Lucky. In Washington, Oregon, Idaho and Alaska, divesting QFC and Carr’s to URM, the owner of Rosauers would have made sense as would had Pattison Food Group or maybe even Loblaws, since they are coming into the states with its T&T Supermarkets? Or for just the Carr’s stores in Alaska, Alaska Commerical might be a good fit! Or how about Hy Vee taking stores in Colorado? It just seems to me that there could have been stronger choices for Kroger and Albertsons than C&S!

Yes, that is by design. Kroger doesn't want to divest stores to a strong retailer that they will then have to compete with. They would rather divest to C&S which is a weak operator that won't threaten their standing in the local market.

[veteran+]

HEB has pretty strong pricing. I did notice a lot of variances in pricing between stores but for the most part HEB is a tough priced store and will absolutely go to battle over price. They are priced much stronger than Publix or Hy Vee- two chains that really do not go to battle over price.

Kroger's great profit earnings report and Target's great profit earnings report despite soft sales numbers. It is so obvious what is going on here with everyone complaining about inflation and all these record profit earnings reports showing up with soft sales numbers...

H-E-B is not far removed from a 1980s grocery warehouse style store (albeit one with better presentation), very limited deli offerings beyond slicing cold cuts, and a heavy reliance on store brand. Publix has better presentation, better deli, and other features, but also a higher price point. To compare the two as being more of the same is preposterous.

Mostly baseless speculation on my part: I've suspected Kroger had some issues before all this, but is Kroger trying desperately so hard to buy Albertsons as-is (without making any adjustments to divestments, etc.) and then blame the acquisition when the wheels are falling off from the company? In any other situation, Kroger should make some PR statement how it was giving up the merger and make the usual overtures about disappointment, then try to come up with an alternate plan, like only buying certain assets. Seems like the acquisition would provide a perfect cover for some accounting shenanigans.

Publix deli also has little offer beyond sliced cold cuts, sandwiches, and hot fried food. They do not have potato salad etc. by the pound; all is prepack OFF SITE (the stores do not handle any by the pound salads- think of all the labor that saves not having to do all those dishes, weigh all those little packages, clean all those serving spoons repeatedly all day). Publix deli program is basically like the Wal Mart deli program but with sandwiches, and higher quality products offered.

What "other features" are you referring to that Publix has that HEB does not have? I have spent a good amount of time in Publix Stores (more than I've spent in HEB Stores) and I cannot think of any such features. Publix has tiny produce and meat departments, very small service counter for meat/seafood (sort of boutique like), same for bakery very small department with a good variety but very little product out (again boutique like).

HEB piles it high... very high... in every department...

Publix also very heavily pushes store brand. But in my opinion (and someone who has extensive experience with both chains wants to disagree- please do so) their store brand mix/program is not nearly as extensive as HEB's store brand program and I am not sure on quality. I think HEB made a very good move to put the HEB name on more of its store brand items instead of that old Country Fair brand or whatever it was they used which looked extremely downscale.

I agree with your assessment of Publix

[pseudo3d]

HEB has pretty strong pricing. I did notice a lot of variances in pricing between stores but for the most part HEB is a tough priced store and will absolutely go to battle over price. They are priced much stronger than Publix or Hy Vee- two chains that really do not go to battle over price.

Kroger's great profit earnings report and Target's great profit earnings report despite soft sales numbers. It is so obvious what is going on here with everyone complaining about inflation and all these record profit earnings reports showing up with soft sales numbers...

H-E-B is not far removed from a 1980s grocery warehouse style store (albeit one with better presentation), very limited deli offerings beyond slicing cold cuts, and a heavy reliance on store brand. Publix has better presentation, better deli, and other features, but also a higher price point. To compare the two as being more of the same is preposterous.

Mostly baseless speculation on my part: I've suspected Kroger had some issues before all this, but is Kroger trying desperately so hard to buy Albertsons as-is (without making any adjustments to divestments, etc.) and then blame the acquisition when the wheels are falling off from the company? In any other situation, Kroger should make some PR statement how it was giving up the merger and make the usual overtures about disappointment, then try to come up with an alternate plan, like only buying certain assets. Seems like the acquisition would provide a perfect cover for some accounting shenanigans.

Publix deli also has little offer beyond sliced cold cuts, sandwiches, and hot fried food. They do not have potato salad etc. by the pound; all is prepack OFF SITE (the stores do not handle any by the pound salads- think of all the labor that saves not having to do all those dishes, weigh all those little packages, clean all those serving spoons repeatedly all day). Publix deli program is basically like the Wal Mart deli program but with sandwiches, and higher quality products offered.

What "other features" are you referring to that Publix has that HEB does not have? I have spent a good amount of time in Publix Stores (more than I've spent in HEB Stores) and I cannot think of any such features. Publix has tiny produce and meat departments, very small service counter for meat/seafood (sort of boutique like), same for bakery very small department with a good variety but very little product out (again boutique like).

HEB piles it high... very high... in every department...

Publix also very heavily pushes store brand. But in my opinion (and someone who has extensive experience with both chains wants to disagree- please do so) their store brand mix/program is not nearly as extensive as HEB's store brand program and I am not sure on quality. I think HEB made a very good move to put the HEB name on more of its store brand items instead of that old Country Fair brand or whatever it was they used which looked extremely downscale.

Admittedly it's been a while since I've visited a Publix. I remember their chicken tender sub--good stuff! But there's nothing of the sort like at H-E-B, and H-E-B quality ranges wildly in quality. There's the H-E-B brand, the Hill Country Fare brand (sometimes co-existing on the same products), and lower-end stores have a brand called Economax which is exactly what you'd expect.

I'll also be the first to admit that my opinion on H-E-B was highly soured on Austin H-E-B stores, with my local store not being in Austin but part of the same division. They discontinued submarine rolls in favor of bolilo rolls, which aren't the same thing...they had a LOT of wasted space. Like Walmart they were fond of slotting multiples of their store brand in the condiments (there are a lot of unflattering Walmart/H-E-B comparisons to make). The merchandise mix was so bad that Randalls (half the size easily) had a comparable selection and in some categories something that H-E-B didn't.

Point is, that H-E-B and Publix are very different stores with different markets...

[wnetmacman]

Admittedly it's been a while since I've visited a Publix. I remember their chicken tender sub--good stuff! But there's nothing of the sort like at H-E-B, and H-E-B quality ranges wildly in quality. There's the H-E-B brand, the Hill Country Fare brand (sometimes co-existing on the same products), and lower-end stores have a brand called Economax which is exactly what you'd expect.

I'll also be the first to admit that my opinion on H-E-B was highly soured on Austin H-E-B stores, with my local store not being in Austin but part of the same division. They discontinued submarine rolls in favor of bolilo rolls, which aren't the same thing...they had a LOT of wasted space. Like Walmart they were fond of slotting multiples of their store brand in the condiments (there are a lot of unflattering Walmart/H-E-B comparisons to make). The merchandise mix was so bad that Randalls (half the size easily) had a comparable selection and in some categories something that H-E-B didn't.

I've been in both recently. You're right in that how they do business does not compare.

Publix runs spotless, near perfectly kept stores, with highly consistent offerings across the board. Their Delis are outright wonderful, though small in some cases. Their pricing is a little high, however, but that is largely because in their home state, they have essentially two large competitors - Walmart and Winn Dixie. We know the second of those two is a non-issue, but Walmart isn't going away.

But if you tell a Floridian - transplanted or otherwise - that Publix is overrated compared to what you have, they will fight passionately. Because to Florida Publix is a truly great store.

To compare HEB to Publix cannot be an apples-to-apples (pardon my pun) comparison, because you're right - they are completely different.

HEB runs high volume impact stores in a few formats - HEB, HEB Plus, Joe V's - they each do a different but busy business. And pricing is very competitive. Also unlike Publix, the store offerings vary widely. I know one store at the far northern edge of their territory that has no deli, bakery or pharmacy, but does as well or better than the Walmart just up the street, and a Brookshire Brothers store in town.

The comparison is in how each is perceived. Note that in the true home territory for HEB near San Antonio and south, the only competitor of substance is, you guessed it, Walmart. They have eliminated everyone else. And tell a Texan that HEB stinks, you WILL fight.

The only correlation that HEB does not have to Publix is that they have not been able to replicate the formula outside their home state. I do not expect that to continue much longer, as I think they are itching to expand somewhere again outside Texas and northern Mexico.

So yes, they are totally different, but outside Florida and Texas, folks perceive Publix and HEB the same. You could add Wegmans and Hy-Vee to that list as well. It's stores we outliers don't have.

[veteran+]

Publix in SW Miami is not consistent and subpar to what you see in other parts of Florida and especially in other States.

I am sure they have their fans but what do they have to compare with in Florida? Not WD and not WM for different reasons.

None of my family, friends and former associates are "fans" of Publix. In fact they are kind of fed up with Publix and wish there were real choices.

[HCal]

The only correlation that HEB does not have to Publix is that they have not been able to replicate the formula outside their home state. I do not expect that to continue much longer, as I think they are itching to expand somewhere again outside Texas and northern Mexico.

They tried to expand into Louisiana and it was a huge disaster. I think they shut down within a year or two.

The more I think about it, the more I feel like the main cause of HEB's success is state pride, which Texas takes to the extreme compared to any other state. Remove all the references to Texas from the walls and aisles and on the private label products, and HEB would just be any other run-of-the-mill supermarket.

They may take another shot at it at some point, but I don't think it will be any time soon. HEB still has plenty of expansion potential within Texas. The state could easily handle another 100 stores or so.

[storewanderer]

The only correlation that HEB does not have to Publix is that they have not been able to replicate the formula outside their home state. I do not expect that to continue much longer, as I think they are itching to expand somewhere again outside Texas and northern Mexico.

They tried to expand into Louisiana and it was a huge disaster. I think they shut down within a year or two.

The more I think about it, the more I feel like the main cause of HEB's success is state pride, which Texas takes to the extreme compared to any other state. Remove all the references to Texas from the walls and aisles and on the private label products, and HEB would just be any other run-of-the-mill supermarket.

They may take another shot at it at some point, but I don't think it will be any time soon. HEB still has plenty of expansion potential within Texas. The state could easily handle another 100 stores or so.

They are a very strong merchandiser, pricer, and staffer. They have some of the strongest operations I've seen with larger stores.

They're barely even in Dallas yet... so ton of potential in TX still.

I'd like to see them expand into AZ, I think they'd do very well there. NM they may do okay but I'm not sure how great the opportunity is. I'm not sure how they'd do in OK and similar to NM I'm just not sure how great the opportunity is.

Wasn't LA Pantry format? That's radically different from what they build today.