Kroger to merge with Albertsons?
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Re: Kroger to merge with Albertsons?
I could be wrong,but given that FoodsCo has generally gone into neighborhoods that Safeway has abandoned or avoided(and barring any FoodsCo/Pak-n-Save overlaps),I consider it a crapshoot whether any of the 66 combined California locations earmarked for divestiture to C&S are in areas from Bakersfield and SLO northward.Even the Calvine Safeway and the Gerber FoodsCo(despite being 'close' on paper)serve areas that are far apart in terms of affluency/demographics.Ditto for the Crocker Village Safeway and the Fruitridge FoodsCo.
Last edited by norcalriteaidclerk on September 14th, 2023, 12:37 pm, edited 1 time in total.
For your life,Thrifty and Payless have got it.
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Re: Kroger to merge with Albertsons?
The lack of divestures a lot of places is surprising.msteph0819 wrote: ↑September 13th, 2023, 4:42 am I'm somewhat surprised at the lack of divestitures in the Washington, DC region.
Safeway is by far the stronger brand when compared to Harris Teeter - frankly, HT's entire operation in the region seems disheveled when compared to its operation in the Carolinas. I felt the same way about HT stores in Nashville prior to their closure.
HT has roughly 38 stores in the region - leaving 28 after the divestiture. What remains of those stores?
I'm also surprised to see the survival of the Signature brands. I had expected Lucerne and O Organics to possibly survive, but does Kroger seriously expect to keep existing brands at Albertsons as is?
Oregon / Washington makes sense and the number of stores (104 in Washington, 49 in Oregon) seems to represent the overlap well. Even Colorado with 52 stores isn't unreasonable given the strength of King Soopers / City Market and the relative weakness of Albertsons / Safeway there.
Arizona, California, Texas, and the DMV area have a relatively low number of divests. In Arizona at least 50 - 60% of the Albertsons/Safeway store base is either across the street from or in very close proximity to a Fry's (Kroger) store, 24 divests is a complete joke. In Southern California between Ralphs, Food4Less, Vons, Pavilions and Albertsons divesting 66 stores is also a complete joke. In Texas, outside of a limited HEB presence and Walmart, Kroger and Albertsons / Tom Thumb / Market Street are the only traditional players in the DFW area.
I believe that they're trying to pull the wool over the FTC and everyone else's eyes. It's absolutely clear that once the merger is completed they will close hundreds of stores within the next few years (100-130 in SoCal, 60 - 70 in Arizona, 40 - 50 in Texas, a dozen or so in New Mexico, a dozen or so in Illinois, a dozen or so in the DMV area). They will probably either leave them as dark stores or put deed restrictions on the stores so that they can no longer be used as grocery stores (something Albertsons LLC and later the post-merger Albertsons has been doing with the shuttered sites in Arizona).
Unlike Kroger, Albertsons / Safeway has done a lot of sale / leasebacks of stores (especially more so since they merged). My guess is that a lot of sites will simply close when the leases expire (but again, as Albertsons / Safeway used to own the site, there are deed restrictions in place preventing other grocers from opening up stores on those sites).
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Re: Kroger to merge with Albertsons?
Even at 104/49, WA and OR are laughable. That represents dozens of clusters of four or more contiguous census tracts (about 16000 consumers) where they’re trying to maintain share comparable to that of the duopoly.
I don’t know what methodology the Attorneys General and the FTC will use but I’m relatively certain that getting much over 50% combined share in multiple contiguous neighborhoods or communities is simply not going to fly. Letting ACI reopen the failed Haggen divests and making ACI stronger in geographies of that scale was an inevitability but rolling up 11% and 24% to make 35% isn’t rolling up 32 and 35 to make 67.
The SoCal divests are a slightly different bird because of the competitive landscape and the geography.
I don’t know what methodology the Attorneys General and the FTC will use but I’m relatively certain that getting much over 50% combined share in multiple contiguous neighborhoods or communities is simply not going to fly. Letting ACI reopen the failed Haggen divests and making ACI stronger in geographies of that scale was an inevitability but rolling up 11% and 24% to make 35% isn’t rolling up 32 and 35 to make 67.
The SoCal divests are a slightly different bird because of the competitive landscape and the geography.
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Re: Kroger to merge with Albertsons?
Lease expirations, I could see a lot of those turning into closures. But I am very sure this is round one of two, and basically this represents stores they would have closed anyway but allows them to save face in the illusion of making competition. I decided not to get too excited about this first group because they're goners regardless of the merger outcome.arizonaguy wrote: ↑September 13th, 2023, 4:20 pmThe lack of divestures a lot of places is surprising.msteph0819 wrote: ↑September 13th, 2023, 4:42 am I'm somewhat surprised at the lack of divestitures in the Washington, DC region.
Safeway is by far the stronger brand when compared to Harris Teeter - frankly, HT's entire operation in the region seems disheveled when compared to its operation in the Carolinas. I felt the same way about HT stores in Nashville prior to their closure.
HT has roughly 38 stores in the region - leaving 28 after the divestiture. What remains of those stores?
I'm also surprised to see the survival of the Signature brands. I had expected Lucerne and O Organics to possibly survive, but does Kroger seriously expect to keep existing brands at Albertsons as is?
Oregon / Washington makes sense and the number of stores (104 in Washington, 49 in Oregon) seems to represent the overlap well. Even Colorado with 52 stores isn't unreasonable given the strength of King Soopers / City Market and the relative weakness of Albertsons / Safeway there.
Arizona, California, Texas, and the DMV area have a relatively low number of divests. In Arizona at least 50 - 60% of the Albertsons/Safeway store base is either across the street from or in very close proximity to a Fry's (Kroger) store, 24 divests is a complete joke. In Southern California between Ralphs, Food4Less, Vons, Pavilions and Albertsons divesting 66 stores is also a complete joke. In Texas, outside of a limited HEB presence and Walmart, Kroger and Albertsons / Tom Thumb / Market Street are the only traditional players in the DFW area.
I believe that they're trying to pull the wool over the FTC and everyone else's eyes. It's absolutely clear that once the merger is completed they will close hundreds of stores within the next few years (100-130 in SoCal, 60 - 70 in Arizona, 40 - 50 in Texas, a dozen or so in New Mexico, a dozen or so in Illinois, a dozen or so in the DMV area). They will probably either leave them as dark stores or put deed restrictions on the stores so that they can no longer be used as grocery stores (something Albertsons LLC and later the post-merger Albertsons has been doing with the shuttered sites in Arizona).
Unlike Kroger, Albertsons / Safeway has done a lot of sale / leasebacks of stores (especially more so since they merged). My guess is that a lot of sites will simply close when the leases expire (but again, as Albertsons / Safeway used to own the site, there are deed restrictions in place preventing other grocers from opening up stores on those sites).
This will turn into a smart play to clear the field early so they only have to discuss a small group of additional stores with the FTC and AGs. They will be able to steer them more easily to choose the divested store and many will potentially slip by. But in a deal of this size it's probably hard to figure out which of 600+ potential overlaps to fight over. By weeding down the list early they can probably have a more productive discussion over each store of concern. There may be more opportunities to discuss where stores are at risk of closing as well due to redevelopment plans which in turn would probably justify keeping more locations due to risk of creating food deserts.
Make no mistake, there is a wave 2 sale plan which will be ordered divests, not desired divests.
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Re: Kroger to merge with Albertsons?
The relative strengths of the brands is debatable. Safeway stopped being the dominant brand in the DC area decades ago and the upkeep of the stores is not great---still, they seem to be maintaining market share. H-T has a bit of a halo, but very uneven market penetration and rather odd locations in DC and inside the Beltway suburbs. some of which are obvious underperformers. Given the strength of WF, the weakness of some locations, the entry of Wegman's and other factors, you could argue that their impact is limited and the brand could vanish without much outcry.msteph0819 wrote: ↑September 13th, 2023, 4:42 am I'm somewhat surprised at the lack of divestitures in the Washington, DC region.
Safeway is by far the stronger brand when compared to Harris Teeter - frankly, HT's entire operation in the region seems disheveled when compared to its operation in the Carolinas. I felt the same way about HT stores in Nashville prior to their closure.
HT has roughly 38 stores in the region - leaving 28 after the divestiture. What remains of those stores?
I'm also surprised to see the survival of the Signature brands. I had expected Lucerne and O Organics to possibly survive, but does Kroger seriously expect to keep existing brands at Albertsons as is?
Re: Kroger to merge with Albertsons?
My hunch is that HT stalled out in the DMV because their business model doesn't work in high cost of living/high wage areas. You won't find anyone around here willing to give a shit about HT's "brand enhancements" for the minimum wage they pay. They can barely find people to keep the shelves stocked, let alone dip strawberries by hand for Valentine's Day or run the Hatch Chili Roaster. This all leads to HTs in the DMV being disheveled looking and lacking the amenities and special events that Carolina HTs have.buckguy wrote: ↑September 14th, 2023, 4:37 amH-T has a bit of a halo, but very uneven market penetration and rather odd locations in DC and inside the Beltway suburbs. some of which are obvious underperformers. Given the strength of WF, the weakness of some locations, the entry of Wegman's and other factors, you could argue that their impact is limited and the brand could vanish without much outcry.msteph0819 wrote: ↑September 13th, 2023, 4:42 am I'm somewhat surprised at the lack of divestitures in the Washington, DC region.
Safeway is by far the stronger brand when compared to Harris Teeter - frankly, HT's entire operation in the region seems disheveled when compared to its operation in the Carolinas. I felt the same way about HT stores in Nashville prior to their closure.
HT has roughly 38 stores in the region - leaving 28 after the divestiture. What remains of those stores?
I'm also surprised to see the survival of the Signature brands. I had expected Lucerne and O Organics to possibly survive, but does Kroger seriously expect to keep existing brands at Albertsons as is?
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Re: Kroger to merge with Albertsons?
I think that Kroger is going to make far fewer changes than we expect. They used to operate like a giant wholesaler that also owned and operated some stores (ironically, like C&S). I think they're going to leave Kroger formats separate from ACI formats for quite some time to create the image of competition and choice. Not that different from how ACI handled their merger with Safeway which arguably has been a successful marriage in the difficult SoCal market other than high prices which Kroger is also guilty of at Ralphs. Albertsons was dead in the water in SoCal and now leads multiple markets. We like to criticize ACI using seemingly Albertsons merchandising with Safeway merchandise but it does seem to work somehow. And they've done it by maintaining subtle differences between their formats to the point where as we know they have viable stores practically next door to one another with different banners. They really have laid the groundwork for doing the same at Kroger. It took about 3 years to integrate those two companies and 5 years to really start making changes (PNW Albertsons to Safeway rebrand initiative, Pavilions relaunch initiative etc.). With how much larger Kroger is I expect 5+ before you see real change aside from the immediate merger required banner changes. I have every expectation that the Albertsons units kept will rebrand with ACI names not KR names. No Albertsons is getting a Ralphs sign unless it's remodeled to the Ralphs format and so forth. The Albertsons will become Vons. This is also a reason they're ramping up the Pavilions name because of the downscale reputation of Vons vs Albertsons; in the richer communities taking the Albertsons "down" to a Vons is going to be perceived negatively. Supposedly another South OC Albertsons after San Clemente is rebranding to Pavilions.msteph0819 wrote: ↑September 13th, 2023, 4:42 am I'm somewhat surprised at the lack of divestitures in the Washington, DC region.
Safeway is by far the stronger brand when compared to Harris Teeter - frankly, HT's entire operation in the region seems disheveled when compared to its operation in the Carolinas. I felt the same way about HT stores in Nashville prior to their closure.
HT has roughly 38 stores in the region - leaving 28 after the divestiture. What remains of those stores?
I'm also surprised to see the survival of the Signature brands. I had expected Lucerne and O Organics to possibly survive, but does Kroger seriously expect to keep existing brands at Albertsons as is?
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Re: Kroger to merge with Albertsons?
I believe these are the first public comments by an FTC official since the merger was announced:
https://seekingalpha.com/news/4011919-a ... rket-deals
I don't know if there's any real news here, but it does look increasingly likely that the FTC will seek to block or greatly restrict this deal.
https://seekingalpha.com/news/4011919-a ... rket-deals
I don't know if there's any real news here, but it does look increasingly likely that the FTC will seek to block or greatly restrict this deal.
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Re: Kroger to merge with Albertsons?
[quote=marketreportblog post_id=50117 time=1694719716 user_id=3205]
I don't know if there's any real news here, but it does look increasingly likely that the FTC will seek to block or greatly restrict this deal.
[/quote]
Zero chance it’s blocked in the sense of “completely disallowed in any form”. The total nationwide market share isn’t even close to that kind of threshold. FTC would get laughed out court.
700-800 divests using algorithms that take into account pedestrian, transit and automotive flows, employment patterns, WIC and SNAP data and store-level financial performance, with grain as fine as census blocks.
I think getting C&S out in front as the preferred candidate at this point is savvy - their role in cleaning up the Fleming mess protected a lot of rural independents and their operations for AAFES have been high-quality. Their balance sheet is also attractive. This is a much healthier approach for interfacing with FTC than the SpinCo appendage that would have serious balance sheet questions from day 1.
I don't know if there's any real news here, but it does look increasingly likely that the FTC will seek to block or greatly restrict this deal.
[/quote]
Zero chance it’s blocked in the sense of “completely disallowed in any form”. The total nationwide market share isn’t even close to that kind of threshold. FTC would get laughed out court.
700-800 divests using algorithms that take into account pedestrian, transit and automotive flows, employment patterns, WIC and SNAP data and store-level financial performance, with grain as fine as census blocks.
I think getting C&S out in front as the preferred candidate at this point is savvy - their role in cleaning up the Fleming mess protected a lot of rural independents and their operations for AAFES have been high-quality. Their balance sheet is also attractive. This is a much healthier approach for interfacing with FTC than the SpinCo appendage that would have serious balance sheet questions from day 1.
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Re: Kroger to merge with Albertsons?
This is so true, @ClownLoach. I remember the palpable excitement at my local Vons store in the runup to the SWY/ACI merger over implementing house-made guacamole and salsa, cut fruit prepared in-store, and the abandonment of pre-sliced deli meats in favor of freshly-sliced every time. The employees were practically giddy. As a customer, I liked it (and still like it at Safeway), too. There was something about the old Albertsons' (and later Essential Everyday) brands that seemed "off." ACI, smartly IMO, tweaked "Safeway [fill in the blank]" into "Signature." There's something about "Signature" that sounds better than "Essential Everyday" and "Kroger." When we look at the Safeway store brands Kroger didn't sell to C&S (O-Organics Signature [fill in the blank]) it becomes apparent they might use those names post-merger and we will see Signature (conventional), Private Selections (premium), Simple Truth, ("all-natural"), O-Organics, and Lucerne brands at the new company.ClownLoach wrote: ↑September 14th, 2023, 11:09 am I think that Kroger is going to make far fewer changes than we expect. They used to operate like a giant wholesaler that also owned and operated some stores (ironically, like C&S). I think they're going to leave Kroger formats separate from ACI formats for quite some time to create the image of competition and choice. Not that different from how ACI handled their merger with Safeway which arguably has been a successful marriage in the difficult SoCal market other than high prices which Kroger is also guilty of at Ralphs. Albertsons was dead in the water in SoCal and now leads multiple markets. We like to criticize ACI using seemingly Albertsons merchandising with Safeway merchandise but it does seem to work somehow. And they've done it by maintaining subtle differences between their formats to the point where as we know they have viable stores practically next door to one another with different banners...
Taking San Diego as an example where Vons outnumbers Ralphs, do you see Kroger keeping both Vons and Ralphs banners?ClownLoach wrote: ↑September 14th, 2023, 11:09 am...They really have laid the groundwork for doing the same at Kroger. It took about 3 years to integrate those two companies and 5 years to really start making changes (PNW Albertsons to Safeway rebrand initiative, Pavilions relaunch initiative etc.). With how much larger Kroger is I expect 5+ before you see real change aside from the immediate merger required banner changes. I have every expectation that the Albertsons units kept will rebrand with ACI names not KR names. No Albertsons is getting a Ralphs sign unless it's remodeled to the Ralphs format and so forth. The Albertsons will become Vons. This is also a reason they're ramping up the Pavilions name because of the downscale reputation of Vons vs Albertsons; in the richer communities taking the Albertsons "down" to a Vons is going to be perceived negatively. Supposedly another South OC Albertsons after San Clemente is rebranding to Pavilions.