🛒 Kroger-Albertsons Merger: National Impact

[submariner]

A place to discuss the impact of the Kroger-Albertsons merger, at the national level affecting all US regions.

[retailfanmitchell019]

In the past few weeks, there has been a deafening silence in terms of merger news, apart from this op-ed: https://progressivegrocer.com/opinion-k ... pers-alike
I wonder if this deal is possibly over... I wouldn't be surprised.

[storewanderer]

In the past few weeks, there has been a deafening silence in terms of merger news, apart from this op-ed: https://progressivegrocer.com/opinion-k ... pers-alike
I wonder if this deal is possibly over... I wouldn't be surprised.

They are still trying to work the merger... it isn't dead yet.

Multiple Albertsons remodels going in Las Vegas. Modern is the decor of choice. The Supervalu build remodeled into Modern (a cheaper version of it- didn't think it could get any cheaper but it can) actually looks nice.

[HCal]

In the past few weeks, there has been a deafening silence in terms of merger news, apart from this op-ed: https://progressivegrocer.com/opinion-k ... pers-alike
I wonder if this deal is possibly over... I wouldn't be surprised.

The merger is now old news, the media has moved on. They will now remain quiet until the outcome is determined.

[CalItalian]

FTC head says decision on blocking Albertsons/Kroger deal won’t happen this year

https://boisedev.com/news/2023/11/02/li ... lbertsons/

They will sue to block. Multiple states will as well.
For the last nearly a year, I've worked in government between D.C. & CA. Heard it all. Timing for an election year is strategic. This is highly political. I said that a year ago when I last posted.

Side note, nobody on either side of the political aisle likes Rodney McMullen - not even those that failed Kroger in lobbying for this merger or a certain Ohio U.S. Senator that took a contribution to say nice things.

[ClownLoach]

FTC head says decision on blocking Albertsons/Kroger deal won’t happen this year

https://boisedev.com/news/2023/11/02/li ... lbertsons/

They will sue to block. Multiple states will as well.
For the last nearly a year, I've worked in government between D.C. & CA. Heard it all. Timing for an election year is strategic. This is highly political. I said that a year ago when I last posted.

Side note, nobody on either side of the political aisle likes Rodney McMullen - not even those that failed Kroger in lobbying for this merger or a certain Ohio U.S. Senator that took a contribution to say nice things.

I think at this point in time the majority shareholders of Albertsons are better off pulling out of the deal anyway. Kroger's refusal to invest in their stores is turning them into another Sears, while the performance at ACI keeps improving. There are probably better routes to getting Apollo and Cerberus their payday. They can't keep extending the deadline forever.

[storewanderer]

I don't expect ACI's performance improvements to continue in the coming months. I am seeing execution issues popping up, at multiple stores, and the pricing decisions they are making lately are perplexing.

Maybe they can fix things for the holidays but that remains to be seen.

Kroger - I don't know.

I am starting to think of life past both of these chains. You have the Safeway chain that has terrible pricing, decent store environment, marginal quality, and a private label program so poorly priced/poorly promoted they could probably discontinue the whole program and few customers would notice or care; and you have the Kroger chains with better pricing, questionable quality, an outstanding private label program, and awful store environment. There are so many other options... in most markets...

[retailfanmitchell019]

There are so many other options... in most markets...

If you want a market with absolutely zero Kroger/Albertsons presence, Minneapolis/St. Paul is the answer (where the grocery market has been a tough place for national chains to enter), along with San Antonio (HEB’s hometown), Kansas City (another tough place for national chains), Cleveland and Pittsburgh (Giant Eagle is the dominant traditional chain, but Cleveland has a Meijer presence), Oklahoma (a state lacking in strong traditional grocers, as Walmart has a monopoly there), and Western Michigan (Meijer’s home turf).

Or, just move to Canada, where Kroger and Albertsons will never have a presence in. But that’s easier said than done…

[storewanderer]

There are so many other options... in most markets...

If you want a market with absolutely zero Kroger/Albertsons presence, Minneapolis/St. Paul is the answer (where the grocery market has been a tough place for national chains to enter), along with San Antonio (HEB’s hometown), Kansas City (another tough place for national chains), Cleveland and Pittsburgh (Giant Eagle is the dominant traditional chain, but Cleveland has a Meijer presence), Oklahoma (a state lacking in strong traditional grocers, as Walmart has a monopoly there), and Western Michigan (Meijer’s home turf).

Or, just move to Canada, where Kroger and Albertsons will never have a presence in. But that’s easier said than done…

It isn't bad having these two chains around. The more options the better when it comes to grocery stores. More competition, better ads, more options for customers as mix varies between every chain, but my main thought there is if these two chains were to just vanish there are still a lot of other options.

Before Wal Mart got into the grocery business it wasn't unusual for the dominant chain in a given market (Albertsons in Boise, King Soopers in Denver, Safeway in NorCal, etc.) to have 40%+ market share- a single chain. Wal Mart came in and even in markets where they don't have much share (like NorCal for instance- but they have some share; plus ever expanding ethnic/Asian chains, Whole Foods, Trader Joe's, Sprouts keep taking share), they broke that situation up universally. But you do have a number of middle US markets where it is almost a Wal Mart plus Kroger monopoly type situation. I think Kroger must like that situation and hopes to replicate it out west with buying Albertsons. What is funny in those markets is Kroger's prices are not bad, they are 30-50% lower than anything Safeway/Albertsons has out west on literally every item.

[HCal]

I think at this point in time the majority shareholders of Albertsons are better off pulling out of the deal anyway. Kroger's refusal to invest in their stores is turning them into another Sears, while the performance at ACI keeps improving. There are probably better routes to getting Apollo and Cerberus their payday. They can't keep extending the deadline forever.

What other routes are you thinking? The only other alternatives I can think of are a sale to some other private equity group or a foreign grocer. Neither one seems realistic right now. If this deal falls through and Cerberus doesn't want to wait, the next best option might be to sell individual divisions, but that will significantly reduce the company's value.