Kroger to merge with Albertsons?

[veteran+]

Side note:

And there are growing numbers of folks moving back to California that is rarely covered.

The article appears and then vanishes quickly.

[HCal]

Side note:

And there are growing numbers of folks moving back to California that is rarely covered.

The article appears and then vanishes quickly.

I think we are finally seeing some signs of declining housing prices in the urban areas. Apartment complexes in LA and OC are renewing leases without a rent increase, which hasn't happened in several years, and houses/condos are staying on the market longer before getting bought.

This may be due to a combination of factors, but I think the major one is the state's aggressive housing construction mandates that cities are slowly realizing they have to comply with.

If this continues, I think the population will start to grow again, or at least stay stable.

In either case, California is one of the few states that I imagine might independently continue to contest the merger even if the FTC signs off. I can't imagine Kroger trying to pull a T-Mobile and merging without approval.

[storewanderer]

I will go check the baking goods which are already all on sale on Holiday displays, but Ralphs and F4L both had reached regular price of $8.99 for Land O Lakes and Danish Creamery here in the IE. They have been running sales so I think the new gimmick is comically high regular price then Macy's style sales that run for months. They had the Land O Lakes at $3.49 after sale plus extra savings if you bought two or more. This strategy of telling you whopper savings stories at checkout is probably how they intend to portray "the billion dollar price cuts" post merger by running up full price to run promotions where "you saved $85.92 today!" Yet the same basket is probably $15 higher than Winco.

The F4L looking rough was Temecula. Slightly off topic, that Temecula F4L is a converted Ralphs which doesn't match the history we thought. The walls are regular block walls unplastered, similar to many Ralphs builds in the 70s and 80s although the front doesn't match. But the back along I-15 has two obvious oval label scars on the block wall where it had a Ralphs sign. Four blocks north is a split up alleged former Ralphs as well at Winchester and Margarita that is now "the 99" and a CVS and I think Planet Fitness. Makes me think they were next to I-15 and rebranded the original Ralphs to F4L (and probably expanded it, opening the ceiling at the time), then opened a newer Ralphs four blocks North which didn't catch on across the street from a Smiths that is now a insanely busy Winco.

I think the Temecula F4L was built as a warehouse store. There were a few different concepts floating in the 90's. Fleming corporate may have been involved in something that was F4L, but not called F4L back in the early/mid 90's in SoCal (similar to the FoodsCo situation in NorCal where you have a F4L but it isn't called F4L since C&S has rights to that name there).

I went to FoodsCo today in Sacramento. The store was very busy with 6-7 checkouts open plus now the 6 self checkouts. They have eliminated the forced "wall of values" type entry (the "wall of values" is still there on the front wall but the other part of the wall that was out in the middle of the store which had Club Packs facing the wall of values then on the opposite side facing into the store had paper products) and now when you walk in it opens you up to wherever you want to go. Bakery looked great- large self serve case with various hispanic pastries, muffins, turnovers, rolls; large refrigerated unit with store packed cake slices; large displays of store made cookies at a 12ct 3.00 sale price; most of the rest of bakery tables were thaw and sell stuff at not great prices. Deli is entirely self serve but has limited deli sliced prepackaged lunchmeat (in bags with a blue cart logo and fresh for everyone slogan), also had a nice area with store packaged salsas (few different types), spanish rice, refried beans, etc. for heat and serve. Hot food was very lacking. Produce area was very busy, the quality doesn't look great but it was very busy. Meat area was well stocked and somewhat busy, plenty of store packed meat, thin sliced too, in addition to the prepack stuff. In walking the aisles at FoodsCo this store is really big (probably about 85k square feet) and it is evident in a lot of cases they are really spreading stuff out on the shelves to make it look full. They have pretty good SKU variety but it could be a lot better. They have more ethnic foods than WinCo, but noticeably less in a lot of other categories.

As far as pricing goes I did take a look at that Land O Lakes Butter: 7.49 there (not on sale). Kroger Butter at 3.99 or a 2pk for 6.99 (Safeway NorCal is 5.99 for 1 pound of Lucerne Butter). Looked at a lot of other prices- not even close to Safeway. For instance Miracle Whip at Safeway NorCal is 9.79 at FoodsCo it was 5.99 (not on sale). A 8oz or whatever bear shape Kroger Honey was 2.99 (sign did say sale but didn't show a regular price) and at Safeway their private label honey is 5.99 for that size. A Kroger Baking Soda cost .89 (not on sale) and at Safeway NorCal a Signature Baking Soda costs 1.99. A box of Kroger Instant Oatmeal was 1.67 (sale; regular was 1.99) and at Safeway NorCal that item in their brand was 3.49 last I checked (a while ago). A Kroger Canned Fruit cost 1.49 and at Safeway NorCal their canned fruit is 2.49. A Del Monte Canned fruit cost 2.69 and at Safeway NorCal that item is on sale for 3.50 (regular 4.49). Also the drug/non food category at FoodsCo had some great prices like 1.00 for Kroger hand soap 7oz or whatever bottle, 1.99 for a Kroger 8oz Hand Sanitizer, these were just regular prices not even sale prices. So FoodsCo pricing is not even close to Safeway on center store. A number of prices I looked at there at FoodsCo were actually .10-.30 lower than Smiths. Nowhere near the Safeway whopper pricing.

[pseudo3d]

.

The F4L looking rough was Temecula. Slightly off topic, that Temecula F4L is a converted Ralphs which doesn't match the history we thought. The walls are regular block walls unplastered, similar to many Ralphs builds in the 70s and 80s although the front doesn't match. But the back along I-15 has two obvious oval label scars on the block wall where it had a Ralphs sign. Four blocks north is a split up alleged former Ralphs as well at Winchester and Margarita that is now "the 99" and a CVS and I think Planet Fitness. Makes me think they were next to I-15 and rebranded the original Ralphs to F4L (and probably expanded it, opening the ceiling at the time), then opened a newer Ralphs four blocks North which didn't catch on across the street from a Smiths that is now a insanely busy Winco.

It could be that they're pulling back on this F4L and would sell it to C&S if a merger went through because they could easily convert this one to an Albertsons. It's surrounded by Albertsons and a couple Vons that both stink. If I were them and trying to pick the losers to sell it would be this F4L and the infamous Murrieta Vons.

Temecula Food 4 Less was originally a Mega Foods: https://www.newspapers.com/article/the- ... 133820387/
Mega Foods was a discount grocer operating in the Las Vegas-San Diego-Phoenix “triangle” in the early 90s. Mega Foods was based in Mesa, AZ. They were a Fleming member. Food 4 Less bought their stores in SoCal and Vegas. Ultimately, Mega was reduced to an Arizona presence in 1996, and it was sold to Bashas’.

Personally, I don’t think this merger stuff is going through, with AG Bonta potentially suing to stop the merger in CA, and the Feds potentially railing against the merger too: https://www.supermarketnews.com/retail- ... cane-storm
The opposition is gaining steam lately with this ill-advised C&S deal.

Not quite, Mega Foods also operated in Texas under "Texans' Warehouse Foods" or some such...having bought Kroger's recently closed San Antonio stores (they stretched as far north as San Marcos, which is in Austin's MSA), but ultimately converted to those Handy Andy before selling off Handy Andy and disappearing (I think they went bankrupt after selling off stores to various operators). By 2000, the stores were completely gone. None of them survived to Handy Andy's eventual sale to Arlan's over a decade later.

[storewanderer]

Not quite, Mega Foods also operated in Texas under "Texans' Warehouse Foods" or some such...having bought Kroger's recently closed San Antonio stores (they stretched as far north as San Marcos, which is in Austin's MSA), but ultimately converted to those Handy Andy before selling off Handy Andy and disappearing (I think they went bankrupt after selling off stores to various operators). By 2000, the stores were completely gone. None of them survived to Handy Andy's eventual sale to Arlan's over a decade later.

Mega didn't use an oval logo but had that rainbow looking logo thing.

I think Mega was somehow affiliated with Fleming, but I'm not sure how. The below article seems to imply that Fleming supplied Mega, then Mega went bankrupt and Fleming owned 10% of it after bankruptcy but didn't supply it.

I found this article. I can't follow what is going on in it too well.
https://journalrecord.com/1996/08/14/fl ... ds-battle/

Looks like Mega Foods blamed Fleming for it going bankrupt and Fleming got offended, sued, kept being a shitty wholesaler, etc. RIP, Flaming.

[veteran+]

I believe that everything Flemming touched turned out bad. I think they even had a short Cub thing going with Pantry Pride.

[storewanderer]

I believe that everything Flemming touched turned out bad. I think they even had a short Cub thing going with Pantry Pride.

I had a pretty positive impression of Fleming in the 90's but then in the early 00's when I started seeing some of what they were doing with their corporate stores, plus the odd behavior of the company (like weekly or monthly press releases announcing all the "new business" they had gotten listing the most random stores, school cafeterias, gas stations, vending machines, etc. I became suspicious of the company's activities and what they were trying to present to the investment community. I also felt Fleming ran some pretty good ad groups and a lot of independents ran them and executed them well.

I started looking closer and noticed they had decent (at the time) private labels in Best Yet and Marquee (non food), but with independent IGAs they'd slot both Best Yet and IGA which made no sense as these stores already were smaller and had limited shelf space (C&S continues this practice today at least in NorCal) other than to inflate sales for Best Yet and hurt IGA (since the more IGA items got sold the better it was for the IGA group). The Best Yet and IGA items often are not from the same supplier (that also continues today- for instance IGA canned pie fillings have no high fructose corn syrup but the Best Yet ones do).

Then I watched as Fleming exited regions and various independent operators lost their stores (since Fleming was guaranteeing the lease contingent on a supply agreement). Then I watched during the Kmart fiasco where Fleming service levels to various independents were dropping to unacceptable levels and they were prioritizing Kmart instead. I realized this "wholesaler" was no friend to the independent grocer. There are various "co op" wholesalers throughout the US who picked up the pieces of Fleming and exist for the betterment of the independent grocer. Fleming as a publicly traded company had different goals.

[pseudo3d]

I believe that everything Flemming touched turned out bad. I think they even had a short Cub thing going with Pantry Pride.

I had a pretty positive impression of Fleming in the 90's but then in the early 00's when I started seeing some of what they were doing with their corporate stores, plus the odd behavior of the company (like weekly or monthly press releases announcing all the "new business" they had gotten listing the most random stores, school cafeterias, gas stations, vending machines, etc. I became suspicious of the company's activities and what they were trying to present to the investment community. I also felt Fleming ran some pretty good ad groups and a lot of independents ran them and executed them well.

I started looking closer and noticed they had decent (at the time) private labels in Best Yet and Marquee (non food), but with independent IGAs they'd slot both Best Yet and IGA which made no sense as these stores already were smaller and had limited shelf space (C&S continues this practice today at least in NorCal) other than to inflate sales for Best Yet and hurt IGA (since the more IGA items got sold the better it was for the IGA group). The Best Yet and IGA items often are not from the same supplier (that also continues today- for instance IGA canned pie fillings have no high fructose corn syrup but the Best Yet ones do).

Then I watched as Fleming exited regions and various independent operators lost their stores (since Fleming was guaranteeing the lease contingent on a supply agreement). Then I watched during the Kmart fiasco where Fleming service levels to various independents were dropping to unacceptable levels and they were prioritizing Kmart instead. I realized this "wholesaler" was no friend to the independent grocer. There are various "co op" wholesalers throughout the US who picked up the pieces of Fleming and exist for the betterment of the independent grocer. Fleming as a publicly traded company had different goals.

What Fleming should've done back in 2000 is merged with Kmart and divested their contracts with independents to other wholesalers (SuperValu, C&S, and other players at the time), it would've saved Fleming trouble when the independent grocers were suing for lack of shipments, and would've given Kmart a reliable base for their food operations.

Pointing out C&S slots both brands is a red flag for the Albertsons/Safeway stores being divested.

[storewanderer]

I started looking closer and noticed they had decent (at the time) private labels in Best Yet and Marquee (non food), but with independent IGAs they'd slot both Best Yet and IGA which made no sense as these stores already were smaller and had limited shelf space (C&S continues this practice today at least in NorCal) other than to inflate sales for Best Yet and hurt IGA (since the more IGA items got sold the better it was for the IGA group). The Best Yet and IGA items often are not from the same supplier (that also continues today- for instance IGA canned pie fillings have no high fructose corn syrup but the Best Yet ones do).


Pointing out C&S slots both brands is a red flag for the Albertsons/Safeway stores being divested.

In theory the IGA Store Operator could turn around and edit/modify the product mix and discontinue the redundant Best Yet item. But most of them don't seem to do that. There aren't enough SKUs in IGA brand to have it be your only private label, it is lacking in a lot of categories or maybe Fleming just never carried all of the available SKUs in NorCal? They take the product sets that C&S sends them which have both private labels slotted. This has been going on forever- it used to be Bonnie Hubbard brand next to IGA.

There are IGAs in NorCal supplied by Supervalu too; those stores do not even get ANY IGA brand items, they just get Essential Everyday everything. Not sure how the WA/MT ones supplied by Supervalu work. I feel like I saw IGA brands at those in the past.

This would not directly be an issue in divested stores as those are unlikely to have the IGA branding. But it says something about the merchandising plan-o-grams that C&S pushes down to the stores.

Frankly in NorCal as a consumer in an independent store supplied by them all these years, you wouldn't even know Fleming went out of business. The way C&S does things is identical to how Fleming did things on merchandising, pricing, even has the same shelf tags as Fleming used to use for the independents. Service levels have obviously improved drastically since Fleming went away but that is about it. C&S has also grown its business to pick up small-ish regional chains. They picked up Scolaris who previously self distributed (only 2 stores left, had about 15 stores when they picked it up), picked up Holiday/Sav-Mor who had been with Unified (about 25 stores- growing with a few actual new stores/a few replacement stores), picked up Mar Val who had been with Supervalu (about 10 stores- growing by buying existing independents), and supply State Foods who maybe has been C&S from its start (central valley- growing by picking up existing independents). Plus the various F4L operators in the region are all C&S and showing some growth lately. Nugget is C&S and has had a great run. So looking at that C&S is growing in NorCal, it is not losing customers, and it serves chains that seem to be growing a little..

[brendenmoney]

While there are articles out there that believe the FTC will do the same as every other merger in past years and approve of it, I still think that there is a chance the FTC will block the merger based off of the likeliness that the C&S deal can likely just be a complete repeat of Haggen.

In Southern California (I have doubts that any NorCal store will need to be divested), there's no doubt the FTC will require additional stores divested, as there are way too many overlapping stores. I wonder if the FTC will require divests in SoCal to go to a more local Chain like Save Mart, Raley's, or Stater. From what I heard, supposedly Stater did put some offers on some of the proposed SoCal divests, but Kroger/Albertsons likely declined looking instead for a buyer who could take a bulk, or even all of the stores. In terms of SoCal, it's clear that Kroger simply wants the larger Albertsons and Vons stores that are in better condition than the current deteriorating Ralphs.

If this merger doesn't go through, I've always thought a probable outcome for Ralphs could be similar to what happened to Albertsons in Florida. In Florida, Albertsons slowly sold chunks of stores at a time to Publix until Publix eventually acquired most of the remaining Albertsons stores in Florida. in 2017, Albertsons finally sold it's three remaining stores to Publix. If the merger doesn't happen, I wonder if Kroger will follow this pattern start selling pieces of it's deteriorating Ralph's chain to what would most likely be Stater, or less likely but maybe Albertsons, Raleys, or Save Mart (or maybe even C&S lol). It's apparent Kroger wants to make little to no further investment in it's current Ralphs portfolio, so without the merger, I see a possibility Stater will use the opportunity to further expand and buy chunks of Ralphs stores at a time, as Stater has already bought a few former Ralphs locations in the Inland Empire, I know one in Riverside was bought out by Stater at some point in the past few years.

Also a little off-topic side note, I wish a chain like Raley's would look to use the merger as an opportunity to expand to SoCal. I know the likelihood of them expanding farther South in CA is slim, but they nearly doubled in size in terms of store count when they purchased Basha's in 2021, and I think it would make sense to fill in the gap between NorCal and Arizona with a store base in SoCal, but it's definitely understandable that the cost to purchase divested stores, and spend money on inventory and renovations to the stores are quite an investment, so I can definitely see how taking time to absorb the Arizona Basha's stores may be the route they are taking now. Maybe they are waiting for "Haggen 2.0" to take it's course so they can buy the stores C&S acquires initially for pennies on the dollar