Kroger to merge with Albertsons?

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Re: Kroger to merge with Albertsons?

Post by storewanderer »

rwsandiego wrote: December 6th, 2022, 10:24 pm
storewanderer wrote: December 6th, 2022, 8:50 pm...What is ironic is AZ probably doesn't even care if they acquire the AZ Stores...
Not quite. Arizona Attorney General Mark Brnovich is one of the AGs who called upon Albertsons to scuttle the "special dividend." Here's the announcement on the AG's website.
Interesting; I was focusing more on the ones who are outright raising questions on the impact of this merger on the consumer/on labor. But the special dividend issue is a separate situation and speaking out against that is, at a minimum, questioning the merger. I really thought that would be paid by now.

I wonder what happens to the share price if the special dividend gets canceled.
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Re: Kroger to merge with Albertsons?

Post by storewanderer »

pseudo3d wrote: December 6th, 2022, 10:34 pm

Politically, Albertsons/Kroger picked a fight with blue strongholds that aren't going to lose power or change anytime soon. Kroger hasn't really done much in terms of how they expect the post-merger to play out, only speaking in vague terms of lowering prices, etc. with no plan for SpinCo or even how the divisions will be drawn out.

Kroger already has low prices and can compete with the best of them, unless they want to go with the Walmart method of strong-arming suppliers, which is not a good thing for consumers.

Besides NorCal (which presents problems in itself), the markets that Kroger doesn't already have a foot in are either rural areas, areas with Safeway/Albertsons running a distant second, or getting crunched by newer competition.
Kroger will absolutely have more clout with suppliers after this merger goes through. This is where the consumer loses the deal. If you have multiple grocers and multiple product manufacturers, those different manufacturers are hungry for volume and they will make deals to promote their products. But if there is just Kroger (no more Safeway, no more Albertsons) then there are fewer grocers to "work with" to make deals for the suppliers. This is why this merger is bad news for the consumer who likes to bargain shop promotions. Sure Kroger will throw a few bones with better deals on private label and other price cuts and that likely will benefit more customers anyway, if they put their programs into these stores...

The worst thing I fear is Kroger takes a look at this and says, now that this Albertsons/Safeway competitor is gone, let's go ahead and just adopt best practices that will maximize profits. Wow, look at those Safeway margins on center store and Safeway's pricing program. We should implement that. But oh, we will also go ahead and implement our cost cut programs in the stores, now the stores will be poorly stocked, look lousy, no more employee uniforms, lousy produce, messy shelves, etc.

Also I am finding Kroger pricing is RAPIDLY increasing. Key items like bread, milk, eggs, they used to be competitive with Wal Mart and WinCo. Not anymore.
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Re: Kroger to merge with Albertsons?

Post by pseudo3d »

storewanderer wrote: December 6th, 2022, 11:26 pm
pseudo3d wrote: December 6th, 2022, 10:34 pm

Politically, Albertsons/Kroger picked a fight with blue strongholds that aren't going to lose power or change anytime soon. Kroger hasn't really done much in terms of how they expect the post-merger to play out, only speaking in vague terms of lowering prices, etc. with no plan for SpinCo or even how the divisions will be drawn out.

Kroger already has low prices and can compete with the best of them, unless they want to go with the Walmart method of strong-arming suppliers, which is not a good thing for consumers.

Besides NorCal (which presents problems in itself), the markets that Kroger doesn't already have a foot in are either rural areas, areas with Safeway/Albertsons running a distant second, or getting crunched by newer competition.
Kroger will absolutely have more clout with suppliers after this merger goes through. This is where the consumer loses the deal. If you have multiple grocers and multiple product manufacturers, those different manufacturers are hungry for volume and they will make deals to promote their products. But if there is just Kroger (no more Safeway, no more Albertsons) then there are fewer grocers to "work with" to make deals for the suppliers. This is why this merger is bad news for the consumer who likes to bargain shop promotions. Sure Kroger will throw a few bones with better deals on private label and other price cuts and that likely will benefit more customers anyway, if they put their programs into these stores...

The worst thing I fear is Kroger takes a look at this and says, now that this Albertsons/Safeway competitor is gone, let's go ahead and just adopt best practices that will maximize profits. Wow, look at those Safeway margins on center store and Safeway's pricing program. We should implement that. But oh, we will also go ahead and implement our cost cut programs in the stores, now the stores will be poorly stocked, look lousy, no more employee uniforms, lousy produce, messy shelves, etc.
Nightmare scenario is Safeway's high center store pricing and Kroger's bad perishables...
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Re: Kroger to merge with Albertsons?

Post by storewanderer »

pseudo3d wrote: December 6th, 2022, 11:29 pm

Nightmare scenario is Safeway's high center store pricing and Kroger's bad perishables...
This is what I am concerned about... I'm not a big fan of the fresh programs at Safeway/Albertsons either but their programs on bakery/deli/meat when executed properly are remarkably better than Kroger often at a lower price due to promotions, and they spend more labor on them. I am concerned these departments are not overly profitable for Safeway/Albertsons, a labor suck, a shrink machine, and the reason Safeway/Albertsons keeps these heavy promotional priced perimeters going is to try and draw customers in, knowing these departments are better than Kroger and can be a draw, while their overpriced center store isn't going to be a draw and Kroger is creaming them on center store.
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Re: Kroger to merge with Albertsons?

Post by veteran+ »

I find it interesting that Kroger is too lazy and cheap to update many of their small and worn out stores in SoCal but excited about spending lots of dough with this merger and possibly absorbing many small, old and low volumes stores.

:roll:
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Re: Kroger to merge with Albertsons?

Post by SamSpade »

Off Topic
storewanderer wrote: December 6th, 2022, 8:50 pm ...from states that aren't even being impacted by this merger like Lee-UT ...
While there is very little for myself and Senator Lee to agree upon, Utah would have some impacts. Kroger's Smith's division is centered out of Salt Lake City and ACI operates a distribution warehouse out of North Salt Lake, UT as well as a small cluster of stores along the Wasatch Front (branded as "Lucky").

In St. George on the south end of the state, this merger would reduce competition, though I believe those Albertsons stores are under Southwest, not Intermountain.

I am assuming his constituency also includes member-owners of Associated Foods, which has significant presence across Utah as well as in surrounding states.
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Re: Kroger to merge with Albertsons?

Post by HCal »

veteran+ wrote: December 7th, 2022, 8:40 am I find it interesting that Kroger is too lazy and cheap to update many of their small and worn out stores in SoCal but excited about spending lots of dough with this merger and possibly absorbing many small, old and low volumes stores.

:roll:
Those small and work out stores in SoCal are making satisfactory profits, so why spend money on them?
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Re: Kroger to merge with Albertsons?

Post by rwsandiego »

storewanderer wrote: December 6th, 2022, 11:19 pm
rwsandiego wrote: December 6th, 2022, 10:24 pm
storewanderer wrote: December 6th, 2022, 8:50 pm...What is ironic is AZ probably doesn't even care if they acquire the AZ Stores...
Not quite. Arizona Attorney General Mark Brnovich is one of the AGs who called upon Albertsons to scuttle the "special dividend." Here's the announcement on the AG's website.
Interesting; I was focusing more on the ones who are outright raising questions on the impact of this merger on the consumer/on labor. But the special dividend issue is a separate situation and speaking out against that is, at a minimum, questioning the merger. I really thought that would be paid by now.

I wonder what happens to the share price if the special dividend gets canceled.
I'm surprised that AG Brnovich hasn't spoken out, as he is a staunch consumer advocate. My guess is he hasn't (aside from the dividend) because he is leaving office and wouldn't be able to finish what he started.

Regardless of the stores that will be divested, I don't see the FTC letting this go through.
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Re: Kroger to merge with Albertsons?

Post by storewanderer »

rwsandiego wrote: December 7th, 2022, 6:06 pm

I'm surprised that AG Brnovich hasn't spoken out, as he is a staunch consumer advocate. My guess is he hasn't (aside from the dividend) because he is leaving office and wouldn't be able to finish what he started.

Regardless of the stores that will be divested, I don't see the FTC letting this go through.
Not to get political but whoever takes Brnovich's place should have no problem carrying forward the concerns regarding this merger as the concerns are not particularly partisan when it comes to consumer concerns... but we know how that goes when the party in control changes... doesn't matter if the last person had good ideas, those ideas go out the window. Maybe this will be one of those topics where there will be a consistent message from both the old AG and the new AG, given the opposition to this merger is from both sides of the aisle, and AZ is a state with very serious overlap.
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Re: Kroger to merge with Albertsons?

Post by veteran+ »

HCal wrote: December 7th, 2022, 3:08 pm
veteran+ wrote: December 7th, 2022, 8:40 am I find it interesting that Kroger is too lazy and cheap to update many of their small and worn out stores in SoCal but excited about spending lots of dough with this merger and possibly absorbing many small, old and low volumes stores.

:roll:
Those small and work out stores in SoCal are making satisfactory profits, so why spend money on them?
Because they are gross, that's why. Not pleasant to shop in and a lot of other negatives. Those stores are the worst ambassadors for the company and a form of negative advertising.

And many in high income, highly educated neighborhoods.
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