Kroger to merge with Albertsons?

[ClownLoach]

I have read in entirety the release containing the details of stores, warehouses, useless banners, and useless private labels being supposedly sold to C&S.

Although I have many comments I will just say an image of a full toilet is most appropriate to demonstrate my reaction.

I completely agree. If this is allowed it will be a dumpster fire. What's interesting is they specifically mention the "banners" they will be selling off like Carrs, but don't mention the one's they will be keeping. It's also interesting that they mentioned some of the stores being divested in some areas might be Kroger stores. Kroger already operates stores under multi banners. I think it would be foolish to say for example, of the 66 stores they include in Southern CA sale to C&S that they are only allowed to use the Albertsons banner. Albertsons has a terrible reputation in LA County while they have a better reputation in Orange County. Denver is a no brainer....they aren't going to convert any of the Albertsons store's they converted to the Safeway banner back to Albertsons banner since they obviously failed in that market. QFC being spun off makes sense, but they aren't going to convert all the remaining Safeway stores to the Albertsons banner after they've spent so much time converting existing Albertsons to Safeway. There is more to the story that hasn't come out.

Kroger has clearly stated they will rebrand as either a KR owned brand or an ACI brand in the 4 states that licensed the Albertsons brand exclusively to C&S. SoCal is definitely going to go from Albertsons-Vons-Pavilions to Ralphs-Vons-Pavilions. Zero indication of banner reduction, and all things considered they did fine with two banners in Washington and Oregon for many years; it's only changing since they obviously need to divest some name up there and pretty much every QFC had a Safeway or Fred Meyer in the neighborhood so QFC banner is the odd man out to make this deal work.

Kroger gets every ACI brand except QFC, Marianos, Carrs, and Albertsons in only four states (otherwise they get Albertsons name everywhere else, so two owners of Albertsons stores just like the Supervalu & LLC days again!). And there's zero sign they're going to reduce brands. But simple analysis shows there's going to be a crap load of Ralphs and Vons that change to Albertsons, while even more Albertsons change to Ralphs, Vons, and Pavilions. So even though 60 something stores sell it could easily be a couple hundred banner swaps just in SoCal since I imagine the gross majority of stores sold are actually Ralphs or Vons in this deal. Basically anything sold becomes an Albertsons. Anything kept that's an Albertsons becomes Ralphs, Vons, or Pavilions. It's going to get really confusing.

It's going to be a 40 yard dumpster fire. The absolute best markets for Albertsons in SoCal where that banner is dominant and Ralphs is 3rd place or worst - Riverside County, San Diego County, Ventura, Santa Barbara, and San Luis Obispo county - will all have to change banners to Ralphs, Vons, Pavilions (or I'm going to throw this out there... Safeway). I do expect the areas from Santa Barbara north to rebrand the kept Albertsons as Safeway since Ralphs runs filthy, low volume stores that ironically are probably going to be all the divests there. Vons could be used but has a poor reputation there stemming from very inconsistent stores. They love Albertsons up there and must be careful with a rebrand which is why I think Safeway is actually the ideal name to come further south. Or Pavilions comes North to the Albertsons crown jewel stores like Paso, Morro Bay and others, but although the stores there have a similar assortment to today's Pavilions (massive wine departments) the demographics don't align with the brand.

Kroger is going to have to consider converting a lot of their Ralphs Fresh Fare to Pavilions, or if the Fresh Fare was in name only like many then take that sign off. This is a good chance for them to fix their upscale sub branding.

[ClownLoach]

I have read in entirety the release containing the details of stores, warehouses, useless banners, and useless private labels being supposedly sold to C&S.

Although I have many comments I will just say an image of a full toilet is most appropriate to demonstrate my reaction.

Denver is a no brainer....they aren't going to convert any of the Albertsons store's they converted to the Safeway banner back to Albertsons banner since they obviously failed in that market.

Guess what? I reread the press release vomit again to fact check. They did license the Albertsons brand for C&S acquired sites in Colorado. So yes, any Safeway or King Soopers (there aren't any other Kroger banners in Colorado are there?) that have been sold to C&S will be rebranded to Albertsons. Unless they want to use Carrs, Marianos, QFC, Grand Union, or... Piggly Wiggly.

Personally just so I can laugh at them I hope they take the Albertsons to Safeway to Piggly Wiggly route.

[HCal]

The last time Albertsons sold a bunch of stores to a wholesaler, it didn't go very well.

I hope the FTC remembers.

[storewanderer]

This is such a joke.

I think I can go with the idea of QFC brand being used on 150 stores in OR/WA. It might work.

Getting the Carr's brand okay. That is great. In Alaska. 14 stores. Okay.

And now back to this thing of the Albertsons banner having two operators again. Really? But with Supervalu/LLC there was still a common private label so the stores still sort of seemed the same. Now with this it is going to, I assume, be really really different... depending if it is a C&S Albertsons or a Kroger Albertsons. And what is the ridiculous logic of how they did this:
C&S gets Albertsons banner in CA - so I assume all 66 divests in CA will banner as Albertsons.
C&S gets Albertsons banner in CO - currently CO has TWO Albertsons Stores (one of which probably doesn't need to be divested). So I guess 50+ CO Safeway will all rebanner as Albertsons?
C&S gets Albertsons banner in AZ - I'll refrain comment until we see what is divested there.
C&S gets Albertsons banner in WY - it appears about 3 stores get divested in WY

So basically this means C&S will get to run about 175 stores under the "Albertsons" banner.

Does Kroger seriously want to use the Albertsons banner in Nevada (where it'll have about 20 stores left) and Utah (where it will probably have like 1 store left)? Why not let C&S have it in those states too?

Also what does Kroger want with the Albertsons banner in OR/WA exactly? They have been very actively converting those stores over to Safeway. Is Kroger really going to preserve the Albertsons banner in OR/WA? Why not let C&S have it there?

Marianos - if they were getting most of those stores I could see it, but it appears they are only getting about 1/3 of the Marianos stores (assuming none of the divests they get are F4L Stores in IL/IN...).

Why are they doing this to the Albertsons banner again splitting it between two owners? This is so dumb. They could have given up various other banners- Vons, Randalls, Lucky, Tom Thumb, Market Street... OR they could have given up the Albertsons banner entirely and let C&S have it.

I don't see how this works for C&S. What banner is C&S going to use in NV, UT, MT, NM, TX, LA? QFC?

I think the bigger story here is this deal gives C&S 8 warehouses. This also appears to give C&S what will be pretty good reach throughout the US. C&S should be able to add to its wholesale business with these additional warehouses so this is a big deal for C&S in that regard.

Also C&S is getting a bargain purchase price of under $5 million per store which is about half of what Haggen paid for its stores. Also C&S I think has pretty solid financial performance so I don't think C&S as a buyer of stores can be discredited or deemed "too little" or something. C&S has large buying power based on its wholesale business. The issue is inexperience running corporate stores. That is a big issue.

What I think here is Kroger/Albertsons is doing C&S very dirty by giving it useless banners and completely useless private labels and this weird term of only being about to use Albertsons banner in a handfull of random states. I almost think C&S would be better off without any of these banners at all and the private labels are completely useless. Or like if C&S had been given the QFC banner and said there you go that is your banner to use anywhere (I guess in theory they could use it anywhere...?)...

I'd like to think C&S is looking out for its interests here. There is a lot at stake (their whole company) if this tanks. Whereas if they had gone the Spinco route they could have done even more rather questionable banner/private label decisions unchecked.



They don't control the Piggly Wiggly name that is a franchise/license type thing. I doubt they'd use that, since you have to pay for it. The only place where using it may make any sense is IL (since it already operates back there) but since they are getting the Mariano banner I assume their intention is to use that banner.

But I had some hard thoughts about it and I really don't think it will be easy to discredit C&S as a buyer. The way they draw this up sounds great to someone who doesn't really understand the grocery business or how the stores work. They get some banners (the problem is the banners are little banners that run in very small geographies and the single legitimate banner Albertsons is only allowed to be used in a few states and mostly those states are ones where it is a weak or almost gone banner). They get some private labels.

Of course the FTC doesn't know one private label - Debi Lily - isn't a real private label but just a licensing agreement for some floral items/vases/candles from some distributor (I wonder how that company feels about this- going from 2,000+ stores to 400 stores). Then you have Waterfront Bistro- frozen seafood brand- I guess that maybe has some value up in WA? Then Open Nature - useless. Then Primo Taglio - again useless. I'm surprised they didn't throw Value Corner in too. Or they could have thrown in Jerseymaid or Cragmont. Perhaps Town House. Or Mrs. Wrights. I'll just stop. If they get this by the FTC they're great.

[arizonaguy]

This is such a joke.

I think I can go with the idea of QFC brand being used on 150 stores in OR/WA. It might work.

Getting the Carr's brand okay. That is great. In Alaska. 14 stores. Okay.

And now back to this thing of the Albertsons banner having two operators again. Really? But with Supervalu/LLC there was still a common private label so the stores still sort of seemed the same. Now with this it is going to, I assume, be really really different... depending if it is a C&S Albertsons or a Kroger Albertsons. And what is the ridiculous logic of how they did this:
C&S gets Albertsons banner in CA - so I assume all 66 divests in CA will banner as Albertsons.
C&S gets Albertsons banner in CO - currently CO has TWO Albertsons Stores (one of which probably doesn't need to be divested). So I guess 50+ CO Safeway will all rebanner as Albertsons?
C&S gets Albertsons banner in AZ - I'll refrain comment until we see what is divested there.
C&S gets Albertsons banner in WY - it appears about 3 stores get divested in WY

So basically this means C&S will get to run about 175 stores under the "Albertsons" banner.

Does Kroger seriously want to use the Albertsons banner in Nevada (where it'll have about 20 stores left) and Utah (where it will probably have like 1 store left)? Why not let C&S have it in those states too?

Also what does Kroger want with the Albertsons banner in OR/WA exactly? They have been very actively converting those stores over to Safeway. Is Kroger really going to preserve the Albertsons banner in OR/WA? Why not let C&S have it there?

Marianos - if they were getting most of those stores I could see it, but it appears they are only getting about 1/3 of the Marianos stores (assuming none of the divests they get are F4L Stores in IL/IN...).

Why are they doing this to the Albertsons banner again splitting it between two owners? This is so dumb. They could have given up various other banners- Vons, Randalls, Lucky, Tom Thumb, Market Street... OR they could have given up the Albertsons banner entirely and let C&S have it.

I don't see how this works for C&S. What banner is C&S going to use in NV, UT, MT, NM, TX, LA? QFC?

I think the bigger story here is this deal gives C&S 8 warehouses. This also appears to give C&S what will be pretty good reach throughout the US. C&S should be able to add to its wholesale business with these additional warehouses so this is a big deal for C&S in that regard.

Also C&S is getting a bargain purchase price of under $5 million per store which is about half of what Haggen paid for its stores. Also C&S I think has pretty solid financial performance so I don't think C&S as a buyer of stores can be discredited or deemed "too little" or something. C&S has large buying power based on its wholesale business. The issue is inexperience running corporate stores. That is a big issue.

What I think here is Kroger/Albertsons is doing C&S very dirty by giving it useless banners and completely useless private labels and this weird term of only being about to use Albertsons banner in a handfull of random states. I almost think C&S would be better off without any of these banners at all and the private labels are completely useless. Or like if C&S had been given the QFC banner and said there you go that is your banner to use anywhere (I guess in theory they could use it anywhere...?)...

I'd like to think C&S is looking out for its interests here. There is a lot at stake (their whole company) if this tanks. Whereas if they had gone the Spinco route they could have done even more rather questionable banner/private label decisions unchecked.



They don't control the Piggly Wiggly name that is a franchise/license type thing. I doubt they'd use that, since you have to pay for it. The only place where using it may make any sense is IL (since it already operates back there) but since they are getting the Mariano banner I assume their intention is to use that banner.

But I had some hard thoughts about it and I really don't think it will be easy to discredit C&S as a buyer. The way they draw this up sounds great to someone who doesn't really understand the grocery business or how the stores work. They get some banners (the problem is the banners are little banners that run in very small geographies and the single legitimate banner Albertsons is only allowed to be used in a few states and mostly those states are ones where it is a weak or almost gone banner). They get some private labels.

Of course the FTC doesn't know one private label - Debi Lily - isn't a real private label but just a licensing agreement for some floral items/vases/candles from some distributor (I wonder how that company feels about this- going from 2,000+ stores to 400 stores). Then you have Waterfront Bistro- frozen seafood brand- I guess that maybe has some value up in WA? Then Open Nature - useless. Then Primo Taglio - again useless. I'm surprised they didn't throw Value Corner in too. Or they could have thrown in Jerseymaid or Cragmont. Perhaps Town House. Or Mrs. Wrights. I'll just stop. If they get this by the FTC they're great.

This is a joke.

The ridiculously low number of divests in the overlapping markets points to this as well.

Even if they shed 24 stores in Arizona they'll still have approximately 200+ stores and there are more than 24 instances of a Kroger and an Albertsons or Safeway store at the same intersection or within a mile of one another. Probably at least 60 - 70 at a minimum.

If this plays out like Albertsons / Safeway or the Fry's / Smith's / Smitty's mergers that already occurred in Arizona eventually all 60 - 70 of those stores will close (with deed restrictions preventing another grocer), it just might take about 5 - 7 years and 60 - 70 shopping centers will be without an anchor tenant as there are only so many fitness centers and thrift stores to go around.

[ClownLoach]

This is such a joke.

I think I can go with the idea of QFC brand being used on 150 stores in OR/WA. It might work.

Getting the Carr's brand okay. That is great. In Alaska. 14 stores. Okay.

And now back to this thing of the Albertsons banner having two operators again. Really? But with Supervalu/LLC there was still a common private label so the stores still sort of seemed the same. Now with this it is going to, I assume, be really really different... depending if it is a C&S Albertsons or a Kroger Albertsons. And what is the ridiculous logic of how they did this:
C&S gets Albertsons banner in CA - so I assume all 66 divests in CA will banner as Albertsons.
C&S gets Albertsons banner in CO - currently CO has TWO Albertsons Stores (one of which probably doesn't need to be divested). So I guess 50+ CO Safeway will all rebanner as Albertsons?
C&S gets Albertsons banner in AZ - I'll refrain comment until we see what is divested there.
C&S gets Albertsons banner in WY - it appears about 3 stores get divested in WY

So basically this means C&S will get to run about 175 stores under the "Albertsons" banner.

Does Kroger seriously want to use the Albertsons banner in Nevada (where it'll have about 20 stores left) and Utah (where it will probably have like 1 store left)? Why not let C&S have it in those states too?

Also what does Kroger want with the Albertsons banner in OR/WA exactly? They have been very actively converting those stores over to Safeway. Is Kroger really going to preserve the Albertsons banner in OR/WA? Why not let C&S have it there?

Marianos - if they were getting most of those stores I could see it, but it appears they are only getting about 1/3 of the Marianos stores (assuming none of the divests they get are F4L Stores in IL/IN...).

Why are they doing this to the Albertsons banner again splitting it between two owners? This is so dumb. They could have given up various other banners- Vons, Randalls, Lucky, Tom Thumb, Market Street... OR they could have given up the Albertsons banner entirely and let C&S have it.

I don't see how this works for C&S. What banner is C&S going to use in NV, UT, MT, NM, TX, LA? QFC?

I think the bigger story here is this deal gives C&S 8 warehouses. This also appears to give C&S what will be pretty good reach throughout the US. C&S should be able to add to its wholesale business with these additional warehouses so this is a big deal for C&S in that regard.

Also C&S is getting a bargain purchase price of under $5 million per store which is about half of what Haggen paid for its stores. Also C&S I think has pretty solid financial performance so I don't think C&S as a buyer of stores can be discredited or deemed "too little" or something. C&S has large buying power based on its wholesale business. The issue is inexperience running corporate stores. That is a big issue.

What I think here is Kroger/Albertsons is doing C&S very dirty by giving it useless banners and completely useless private labels and this weird term of only being about to use Albertsons banner in a handfull of random states. I almost think C&S would be better off without any of these banners at all and the private labels are completely useless. Or like if C&S had been given the QFC banner and said there you go that is your banner to use anywhere (I guess in theory they could use it anywhere...?)...

I'd like to think C&S is looking out for its interests here. There is a lot at stake (their whole company) if this tanks. Whereas if they had gone the Spinco route they could have done even more rather questionable banner/private label decisions unchecked.



They don't control the Piggly Wiggly name that is a franchise/license type thing. I doubt they'd use that, since you have to pay for it. The only place where using it may make any sense is IL (since it already operates back there) but since they are getting the Mariano banner I assume their intention is to use that banner.

But I had some hard thoughts about it and I really don't think it will be easy to discredit C&S as a buyer. The way they draw this up sounds great to someone who doesn't really understand the grocery business or how the stores work. They get some banners (the problem is the banners are little banners that run in very small geographies and the single legitimate banner Albertsons is only allowed to be used in a few states and mostly those states are ones where it is a weak or almost gone banner). They get some private labels.

Of course the FTC doesn't know one private label - Debi Lily - isn't a real private label but just a licensing agreement for some floral items/vases/candles from some distributor (I wonder how that company feels about this- going from 2,000+ stores to 400 stores). Then you have Waterfront Bistro- frozen seafood brand- I guess that maybe has some value up in WA? Then Open Nature - useless. Then Primo Taglio - again useless. I'm surprised they didn't throw Value Corner in too. Or they could have thrown in Jerseymaid or Cragmont. Perhaps Town House. Or Mrs. Wrights. I'll just stop. If they get this by the FTC they're great.

This is a joke.

The ridiculously low number of divests in the overlapping markets points to this as well.

Even if they shed 24 stores in Arizona they'll still have approximately 200+ stores and there are more than 24 instances of a Kroger and an Albertsons or Safeway store at the same intersection or within a mile of one another. Probably at least 60 - 70 at a minimum.

If this plays out like Albertsons / Safeway or the Fry's / Smith's / Smitty's mergers that already occurred in Arizona eventually all 60 - 70 of those stores will close (with deed restrictions preventing another grocer), it just might take about 5 - 7 years and 60 - 70 shopping centers will be without an anchor tenant as there are only so many fitness centers and thrift stores to go around.

I think the count is too light in SoCal as well. 60 something stores means only opposite corner or block away type situations which mostly are Ralphs and Vons. Having slept on it, I really wonder how badly this is going to go in SoCal because so many stores are going to change banners - to simplify things they should just drop to Ralphs and Pavilions (since obviously Pavilions is still being expanded right now both north and south with apparent success).

Arizona is a big question since some are union and some aren't so I'm curious which went to C&S.

I think there is some strange level of hatred for Albertsons in Oregon and Washington state which has led to the rebannering of nearly every store to Safeway. Apparently they change the sign (since the stores were remodeled to same interiors years ago) and magically business explodes as all the customers reallocate themselves across the market. Apparently enough people have a long distaste for them that they would drive past one or two Albertsons to get to a Safeway. So that's well known enough that they weren't going to license it there. I'm sure Kroger probably wanted to license Albertsons to C&S for the whole West Coast and keep the QFC brand, but compromised and sold QFC. So again anything Kroger keeps can't be branded QFC which leaves them with Safeway, Fred Meyer or Albertsons. I'm sure they kept their flagship QFC's like Broadway and University Village, maybe Wallingford, so their names will have to change.

Mentioning Debi Lily - they started phasing it out a couple of months ago to "Signature Floral" so obviously they knew this was coming. They also have been blowing out Waterfront Bistro frozen seafood on ad specials.

I am firmly convinced that the 2nd wave stores, which will be stores they're forced to sell vs stores they want to sell, might go down differently. I think they are going to be forced to give up more in SoCal than just the other corner/next block over situations.

[BillyGr]

They have explicitly stated: #1 - no spin offs, Spinco, etc. They're now a no-spin zone period.

#2 - C&S has the first right to buy all of the remaining 231 stores that may or may not be sold.

So, unless C&S doesn't take the 2nd wave of stores nobody else will be joining this deal. Furthermore, anyone acquiring 231 stores that likely will be very spread across the entire country will fail.

Although that doesn't say that if C&S doesn't want those extra stores, all 231 would have to go to one person. That might be where they allow some existing chain to buy just some in an area they want, while someone else takes others.
Or, C&S finds those chains now and has them lined up so that if additional stores are announced, they can take them and then resell pieces (much as they did with GU the first time).

I don't see how this works for C&S. What banner is C&S going to use in NV, UT, MT, NM, TX, LA? QFC?

They don't control the Piggly Wiggly name that is a franchise/license type thing. I doubt they'd use that, since you have to pay for it. The only place where using it may make any sense is IL (since it already operates back there) but since they are getting the Mariano banner I assume their intention is to use that banner.

Good question on what they would use, but if it's going to be something totally new to an area, does it really matter? People like new brands sometimes, that might draw more interest than changing to something they already know.

Just to note, they DID throw that one Piggly-Wiggly in northern NY (two of the stores they got from Tops/PC were in the same town, so one is GU and the other is the Piggly-Wiggly). So, both using that franchise name, and a name that has never that I know of been in NY State (but people have heard of from other places)...

[marshd1000]

There is another nice flagship QFC where there is a small possibility that they would keep it and that would be Downtown Bellevue. It’s a super nice store across from Bellevue Square. But while I’m sure they get great sales, there is a super nice Safeway nearby. Also, Kroger might throw a bone to C&S and let them have it as the QFC divisional offices are there!

[reymann]

i wonder if C&S will ultimately have these stores ran by franchisees or not.

[marshd1000]

i wonder if C&S will ultimately have these stores ran by franchisees or not.

If so, it may not be for awhile. Plus, any independent owner would have to keep it a union shop.