🛒 Kroger-Albertsons Merger: California Impact

[CalItalian]

Smart and Final Extra! is opening literally next door to this Ralphs in the former Best Buy space this summer. New Aldi opened 1 mile down the street on February 1, 2024. Already quite popular.

Temecula is not growing very fast. Unlike Murrieta, Menifee, Wildomar, Lake Elsinore, they haven't approved many new single family homes or townhomes. Murrieta and Menifee have each surpassed Temecula in population.

That is probably not great news for the Ralphs... even if Smart & Final only does $250k a week and $100k of that comes from Ralphs that is probably 15% of Ralphs volume.

If Kroger fixed pricing in California to get it more in line with surrounding states, it would be a non-issue.

Also a high quality perimeter and nice looking store would be a good way to fight Smart & Final being next door too. Oops on that remodel they just did downgrading store appearance...

The Ralphs pulls from a large area of people who prefer them to Albertsons or Stater. It's the only Ralphs around, the others are 10+ miles away. I know people in Fallbrook who drive to this Ralphs (they work in the area but prefer Ralphs over other chains). Remember there are 8 Albertsons/Vons between the Temecula and Murrieta Ralphs. In a few blocks on the Parkway you've got Ralphs, S&F, flagship Walmart Supercenter that somehow keeps looking even better each day since the remodel which is a miracle for them, Aldi, a large Albertsons that was built to be Lucky-SavOn combo store, and Stater Bros. A few thousand new luxury apartments going in up on Ynez a few miles from all of them so everyone will keep comping up. And the Ralphs is the first stop coming in from the desert communities up Hwy 79. I think if the merger had been successful the Ralphs would be retained and the Albertsons dumped on C&S if for no other reason than it would be exceptionally easy to close then subdivide into two or three box stores due to its shape and size.

This S&F is not even using all the space, and it was already a small Best Buy. They walled off the back third of the store or maybe even more looking in. They obviously have low expectations, and I expect it will split the business of the Murrieta store which has very little consumer traffic. It will most likely be geared to small businesses and not consumers. If the flagship Walmart remodel didn't do in the Ralphs then S&F won't either.

The Aldi is pretty popular out of the gate, but the one a short distance away on Rancho California is now a ghost town. It is poorly situated in the type of spot I'd expect to be a Walgreens. Again no real change of share, just a shifting of location. The Aldi is another space waster, they took a large furniture store and walled off the left and right quarters of the building but didn't configure them for subleasing. Two giant empty rooms.

If any other store is a threat to Ralphs, it's the Stater that is finishing up a 6 month long complete remodel taking it from a redecorated 90s era Albertsons convert into the latest SB prototype. The only department that wasn't torn down to the block wall was meats. Everything else has been rebuilt from floor to ceiling, I have to stop by and check on progress as they were finally painting and beginning graphics install. It looked like they were moving deli and bakery, and liquor had moved to the demolished old pharmacy area. It serves as a reminder of what a real remodel is, something we seldom see in SoCal these days.

Temecula Ralphs is not a busy store. Not in the way the Murrieta or Menifee Ralphs is. And it is way, way off I-15 in a heavy traffic corridor. It's 13.5 miles to Murrieta Ralphs which is a larger store. Menifee Ralphs has 12 self-checkout stations which even Murrieta doesn't have.

[storewanderer]

That is probably not great news for the Ralphs... even if Smart & Final only does $250k a week and $100k of that comes from Ralphs that is probably 15% of Ralphs volume.

If Kroger fixed pricing in California to get it more in line with surrounding states, it would be a non-issue.

Also a high quality perimeter and nice looking store would be a good way to fight Smart & Final being next door too. Oops on that remodel they just did downgrading store appearance...

The Ralphs pulls from a large area of people who prefer them to Albertsons or Stater. It's the only Ralphs around, the others are 10+ miles away. I know people in Fallbrook who drive to this Ralphs (they work in the area but prefer Ralphs over other chains). Remember there are 8 Albertsons/Vons between the Temecula and Murrieta Ralphs. In a few blocks on the Parkway you've got Ralphs, S&F, flagship Walmart Supercenter that somehow keeps looking even better each day since the remodel which is a miracle for them, Aldi, a large Albertsons that was built to be Lucky-SavOn combo store, and Stater Bros. A few thousand new luxury apartments going in up on Ynez a few miles from all of them so everyone will keep comping up. And the Ralphs is the first stop coming in from the desert communities up Hwy 79. I think if the merger had been successful the Ralphs would be retained and the Albertsons dumped on C&S if for no other reason than it would be exceptionally easy to close then subdivide into two or three box stores due to its shape and size.

This S&F is not even using all the space, and it was already a small Best Buy. They walled off the back third of the store or maybe even more looking in. They obviously have low expectations, and I expect it will split the business of the Murrieta store which has very little consumer traffic. It will most likely be geared to small businesses and not consumers. If the flagship Walmart remodel didn't do in the Ralphs then S&F won't either.

The Aldi is pretty popular out of the gate, but the one a short distance away on Rancho California is now a ghost town. It is poorly situated in the type of spot I'd expect to be a Walgreens. Again no real change of share, just a shifting of location. The Aldi is another space waster, they took a large furniture store and walled off the left and right quarters of the building but didn't configure them for subleasing. Two giant empty rooms.

If any other store is a threat to Ralphs, it's the Stater that is finishing up a 6 month long complete remodel taking it from a redecorated 90s era Albertsons convert into the latest SB prototype. The only department that wasn't torn down to the block wall was meats. Everything else has been rebuilt from floor to ceiling, I have to stop by and check on progress as they were finally painting and beginning graphics install. It looked like they were moving deli and bakery, and liquor had moved to the demolished old pharmacy area. It serves as a reminder of what a real remodel is, something we seldom see in SoCal these days.

Temecula Ralphs is not a busy store. Not in the way the Murrieta or Menifee Ralphs is. And it is way, way off I-15 in a heavy traffic corridor. It's 13.5 miles to Murrieta Ralphs which is a larger store. Menifee Ralphs has 12 self-checkout stations which even Murrieta doesn't have.

Some legitimate competitor seems like they should be able to show up and knock that Menifee Ralphs out. It is amazing how the growth in the area has saved that store.

We will see how Smart & Final impacts the Ralphs in Temecula. I just hope it+Stater remodel doesn't somehow push it to closure.

[CalItalian]

The Ralphs pulls from a large area of people who prefer them to Albertsons or Stater. It's the only Ralphs around, the others are 10+ miles away. I know people in Fallbrook who drive to this Ralphs (they work in the area but prefer Ralphs over other chains). Remember there are 8 Albertsons/Vons between the Temecula and Murrieta Ralphs. In a few blocks on the Parkway you've got Ralphs, S&F, flagship Walmart Supercenter that somehow keeps looking even better each day since the remodel which is a miracle for them, Aldi, a large Albertsons that was built to be Lucky-SavOn combo store, and Stater Bros. A few thousand new luxury apartments going in up on Ynez a few miles from all of them so everyone will keep comping up. And the Ralphs is the first stop coming in from the desert communities up Hwy 79. I think if the merger had been successful the Ralphs would be retained and the Albertsons dumped on C&S if for no other reason than it would be exceptionally easy to close then subdivide into two or three box stores due to its shape and size.

This S&F is not even using all the space, and it was already a small Best Buy. They walled off the back third of the store or maybe even more looking in. They obviously have low expectations, and I expect it will split the business of the Murrieta store which has very little consumer traffic. It will most likely be geared to small businesses and not consumers. If the flagship Walmart remodel didn't do in the Ralphs then S&F won't either.

The Aldi is pretty popular out of the gate, but the one a short distance away on Rancho California is now a ghost town. It is poorly situated in the type of spot I'd expect to be a Walgreens. Again no real change of share, just a shifting of location. The Aldi is another space waster, they took a large furniture store and walled off the left and right quarters of the building but didn't configure them for subleasing. Two giant empty rooms.

If any other store is a threat to Ralphs, it's the Stater that is finishing up a 6 month long complete remodel taking it from a redecorated 90s era Albertsons convert into the latest SB prototype. The only department that wasn't torn down to the block wall was meats. Everything else has been rebuilt from floor to ceiling, I have to stop by and check on progress as they were finally painting and beginning graphics install. It looked like they were moving deli and bakery, and liquor had moved to the demolished old pharmacy area. It serves as a reminder of what a real remodel is, something we seldom see in SoCal these days.

Temecula Ralphs is not a busy store. Not in the way the Murrieta or Menifee Ralphs is. And it is way, way off I-15 in a heavy traffic corridor. It's 13.5 miles to Murrieta Ralphs which is a larger store. Menifee Ralphs has 12 self-checkout stations which even Murrieta doesn't have.

Some legitimate competitor seems like they should be able to show up and knock that Menifee Ralphs out. It is amazing how the growth in the area has saved that store.

We will see how Smart & Final impacts the Ralphs in Temecula. I just hope it+Stater remodel doesn't somehow push it to closure.

Smart & Final Extra! Temecula opened this morning.
It's a well designed but fairly basic store. They utilized space very well. In some ways, it feels like Stater Bros. inspired the design. The only area where it really differs from any other Smart & Final is a larger wine area. With a few local labels. They clearly aren't targeting business customers. Grand Opening ad, which is viewable online, is better than most markets I've seen in the last few years. Not a lot of customers for a grand opening morning. They are giving away products & gift cards today with a spin to win.

[brendenmoney]

Temecula Ralphs is not a busy store. Not in the way the Murrieta or Menifee Ralphs is. And it is way, way off I-15 in a heavy traffic corridor. It's 13.5 miles to Murrieta Ralphs which is a larger store. Menifee Ralphs has 12 self-checkout stations which even Murrieta doesn't have.

Some legitimate competitor seems like they should be able to show up and knock that Menifee Ralphs out. It is amazing how the growth in the area has saved that store.

We will see how Smart & Final impacts the Ralphs in Temecula. I just hope it+Stater remodel doesn't somehow push it to closure.

Smart & Final Extra! Temecula opened this morning.
It's a well designed but fairly basic store. They utilized space very well. In some ways, it feels like Stater Bros. inspired the design. The only area where it really differs from any other Smart & Final is a larger wine area. With a few local labels. They clearly aren't targeting business customers. Grand Opening ad, which is viewable online, is better than most markets I've seen in the last few years. Not a lot of customers for a grand opening morning. They are giving away products & gift cards today with a spin to win.

As much as I would hope this new Smart & Final wouldn't cause Ralphs to close, a lot of competition now exists on this stretch of Temecula Parkway, including the traditional operators, Albertsons, Ralphs, and Stater Bros, the latter just finishing up a major remodel. On top of this, there are also Aldi, Sprouts, and a Walmart Supercenter, leaving seven grocery operators on this stretch. Competition is good, but too much competition in one area is enough to push a store or two out, and I imagine we all know which two stores would most likely pull out, out of these seven.

Now, I visit this area very recently, and the Albertsons was doing fairly well, and Stater was really busy after its new remodel. After checking out Ralphs, I know it's not the most favorable decor, but at the very least it was a very clean and organized store, just not many customers patronizing it. And this was just a few days before Smart & Final opening. I don't think this new Smart & Final is very good news for this Ralphs, although Ralphs does have a pharmacy, which something Smart & Final doesn't have, so at the very least they have that over them.

Albertsons and Kroger did release a new divesture package, ruling out the possibility of any Ralphs divestures in California. I'm not sure if they intend on divesting any stores on this stretch in the now very unlikely scenario this merger goes through, but if they have a chance of having this merger going through, there is no doubt the FTC is going to require them to give up at least one store on this strip. Yes, a lot of competition exists on this stretch, but this is a scenario where there are two stores right next to each other, and one's gotta give. If no Ralphs are divested, then it would have to be the Albertsons.

Also, not to be a party pooper, but there is enough conversation about the Temecula Smart & Final that a new thread for it could be started outside of the merger thread...

[HCal]

I'm not sure if they intend on divesting any stores on this stretch in the now very unlikely scenario this merger goes through, but if they have a chance of having this merger going through, there is no doubt the FTC is going to require them to give up at least one store on this strip. Yes, a lot of competition exists on this stretch, but this is a scenario where there are two stores right next to each other, and one's gotta give. If no Ralphs are divested, then it would have to be the Albertsons.

With the amount of competition in the area, I don't see why FTC would require a divestiture. There are lots of other options, and no risk of a monopoly being formed.

[ClownLoach]

Some legitimate competitor seems like they should be able to show up and knock that Menifee Ralphs out. It is amazing how the growth in the area has saved that store.

We will see how Smart & Final impacts the Ralphs in Temecula. I just hope it+Stater remodel doesn't somehow push it to closure.

Smart & Final Extra! Temecula opened this morning.
It's a well designed but fairly basic store. They utilized space very well. In some ways, it feels like Stater Bros. inspired the design. The only area where it really differs from any other Smart & Final is a larger wine area. With a few local labels. They clearly aren't targeting business customers. Grand Opening ad, which is viewable online, is better than most markets I've seen in the last few years. Not a lot of customers for a grand opening morning. They are giving away products & gift cards today with a spin to win.

Also, not to be a party pooper, but there is enough conversation about the Temecula Smart & Final that a new thread for it could be started outside of the merger thread...

New thread started with my observation after spending the entire afternoon visiting everyone except Walmart.

The Albertsons would be the divestiture on that strip without question. Cheaply built Lucky-SavOn combo store, now next door to Aldi and across from Walmart, 2nd worst parking situation on the strip (Sprouts is worst), and very easily subdivided. Plus another Albertsons store right up Margarita Rd and a Vons. My guess is they would choose divesting both Vons branded stores as they're the two worst, but that means rebranding insanity for the 7 other Albertsons kept.

[SoCalShopper1023]

I know I'm a little late, but I'm recently catching up with the latest divesture plan announced by Kroger.

According to what I read, Kroger is divesting the Albertsons banner to C&S in California. I wonder if this includes the Vons and Pavilions banner also being divested? Or just the Albertsons banner alone?

As a So Cal resident that lives in a city that has a Ralphs, Vons, Pavilions, and Food 4 Less all within a 3 mile radius, I'm interested to see how this will play out.

In my opinion, the best way for Kroger to consolidate the banners in Southern California would be:
- Ralphs (traditional "mid-tier" format)
- Pavilions (their higher end format banner, possibly eliminating the Fresh Fare branding)
- Food 4 Less (keeping their price impact format)

This would end up eliminating the Vons banner, since in my opinion, it would make no sense for them to have both Ralphs and Vons branded stores, since they both basically serve the same clientele and having too many banners in the same geographical region would create too much confusion for customers, and for printing their ads. Plus I don't see Kroger eliminating their own banner Ralphs in favor of Vons.

I also don't see Kroger eliminating Food 4 Less or converting it to another format (or vice versa), since Food 4 Less employees are under a different union contract, and any banner conversion with F4L would result in "closing" the existing store, thus resulting negative PR for Kroger.

[reymann]

I know I'm a little late, but I'm recently catching up with the latest divesture plan announced by Kroger.

According to what I read, Kroger is divesting the Albertsons banner to C&S in California. I wonder if this includes the Vons and Pavilions banner also being divested? Or just the Albertsons banner alone?

As a So Cal resident that lives in a city that has a Ralphs, Vons, Pavilions, and Food 4 Less all within a 3 mile radius, I'm interested to see how this will play out.

In my opinion, the best way for Kroger to consolidate the banners in Southern California would be:
- Ralphs (traditional "mid-tier" format)
- Pavilions (their higher end format banner, possibly eliminating the Fresh Fare branding)
- Food 4 Less (keeping their price impact format)

This would end up eliminating the Vons banner, since in my opinion, it would make no sense for them to have both Ralphs and Vons branded stores, since they both basically serve the same clientele and having too many banners in the same geographical region would create too much confusion for customers, and for printing their ads. Plus I don't see Kroger eliminating their own banner Ralphs in favor of Vons.

I also don't see Kroger eliminating Food 4 Less or converting it to another format (or vice versa), since Food 4 Less employees are under a different union contract, and any banner conversion with F4L would result in "closing" the existing store, thus resulting negative PR for Kroger.

I don't see the Ralphs banner working on the central coast and in Kern county. I would keep the Albertsons banner in those areas and rebrand the Fresno area Vons stores to Safeway since their circular with the NorCal stores.