C&S new stores in the PNW

[VibeGuy]

The current divest count in the PNW ex-Alaska is somewhere between aspiration and outright delusion. For Washington locations it’s going to leave the Safeway banner on the net 25-30 ACI pickups they retain and whatever current QFC locations survive (10-15 by my guess).

I’m skeptical that FM won’t eventually ditch a couple of Marketplace-like locations where there’s a better / larger ACI property within the census tract.

60 grocery-and-pharmacy Safeway locations spread across OR and WA isn’t much, but my guess is C&S balked at the price of a brand license and Kroger is somewhat skeptical about slapping the FM name on grocery-only properties, even after building a perfectly nice new build where they did just that.

I do think C&S eventually further monetises the Piggly Wiggly brand in the new territories. Either they expand licensing it to independents served by the newly-fortified wholesale side, or they do an O&O EDLP discount banner to slot in around Winco and Walmart in less affluent suburban, exurban and rural markets.

[ClownLoach]

The current divest count in the PNW ex-Alaska is somewhere between aspiration and outright delusion. For Washington locations it’s going to leave the Safeway banner on the net 25-30 ACI pickups they retain and whatever current QFC locations survive (10-15 by my guess).

I’m skeptical that FM won’t eventually ditch a couple of Marketplace-like locations where there’s a better / larger ACI property within the census tract.

60 grocery-and-pharmacy Safeway locations spread across OR and WA isn’t much, but my guess is C&S balked at the price of a brand license and Kroger is somewhat skeptical about slapping the FM name on grocery-only properties, even after building a perfectly nice new build where they did just that.

I do think C&S eventually further monetises the Piggly Wiggly brand in the new territories. Either they expand licensing it to independents served by the newly-fortified wholesale side, or they do an O&O EDLP discount banner to slot in around Winco and Walmart in less affluent suburban, exurban and rural markets.

This is wave one of two groups of stores to be sold. It's going to be entirely stores they'd close if they were able to merge without any divestitures, coupled with super obvious ones like a Safeway on the opposite corner from a Fred Meyer. C&S isn't going to wind up with any large Fred Meyer stores because they don't have the ability to fill them, so any divests will be Safeway, Albertsons, and QFC locations.

Look at it this way: the first group will be stores they want to get rid of in the merger, and won't set up for any form of real success despite saying otherwise (hence the lame QFC banner being sold but not Albertsons banner). I'm sure C&S wanted to buy the entire Albertsons name, or Safeway name, or pick another valuable name for national brand recognition and banner consistency but Kroger wouldn't part with it. They probably recognized that forcing a rebrand of stores sold in SoCal to something nobody's heard of like Piggly Wiggly will result in total disaster after the Haggen fiasco and thus begrudgingly relinquished license rights to Albertsons and only there plus 3 states. Since a Haggen scale disaster would result in the FTC filing a antitrust suit to torpedo the merger if all the divests in CA went under in short term after the merger.

They'll all be older, smaller, less desirable stores in wave one - and anything "nice" thrown in the mix will turn out to be sites where the landlords are trying to boot them to build homes. The second group will be the stores they have to sell to close the deal, and all will be intensely negotiated with the FTC and State AG's. I stopped being concerned about the low divest count because it's obvious they're going to battle it out over selling as few of the "keeper" stores as they can. The divest count in Washington, Oregon, California and Arizona especially will go up when wave 2 sales are announced.

The fact is that by taking about 400 stores out of the discussion entirely they can have more productive conversations with the government and whoever else to try to whittle down the wave 2 thus keeping as many "good stores" as they can. There are probably another 400 stores that will be discussed, and their stated goal is to sell no more than 231 more. Since they already compromised and sold DCs and facilities after originally saying they would keep them all, I imagine they'll budge a bit on the 231 but in the end they'll probably keep more "good" stores because they have narrowed the set that will undergo negotiations. It's smart on their part and in my opinion could be a decision that ultimately enables the deal to go through for them. No way they could productively discuss 800+ divests, and entirely possible in such a scenario they'd lose 500+ of the "best" stores while now they're obviously shooting to only lose 231 or less of them. The obvious loser in such a Wave 2 is their buying partner C&S who will receive fewer "Tier 1 Quality" locations that will deliver fatter operating margins and sales volumes, thus making it harder for their efforts to be successful.

[storewanderer]

They will have rights to QFC in OR/WA. I would be shocked if they used any other banner than QFC in OR/WA.

They will have collectively 150+ stores between OR and WA (plus the small group in Alaska). That is not a bad base of stores. QFC under Kroger has been poor- perimeters are poor, prices are way too high for the "quality" of their offer, center store pricing is high. But QFCs have focused a bit harder on local products and some of their larger/flagship stores actually do still have pretty nice perimeters.

But those nicer/larger flagship type QFCs are not a format/offer/price scale that will work on a former Safeway down in Eugene, Medford, or Spokane. So they are going to have to figure out some other way with stores they get divested in those outer markets. Really I think anyone who takes over Safeway stores in OR/WA will fail. The customer is too used to the Safeway offer; it isn't a great offer but throw up a QFC sign and suddenly all the problems Safeway had with prices, service, and quality that the customer just accepted with indifference for decades, the customer suddenly will take great issue with.

[babs]

They will have rights to QFC in OR/WA. I would be shocked if they used any other banner than QFC in OR/WA.

They will have collectively 150+ stores between OR and WA (plus the small group in Alaska). That is not a bad base of stores. QFC under Kroger has been poor- perimeters are poor, prices are way too high for the "quality" of their offer, center store pricing is high. But QFCs have focused a bit harder on local products and some of their larger/flagship stores actually do still have pretty nice perimeters.

But those nicer/larger flagship type QFCs are not a format/offer/price scale that will work on a former Safeway down in Eugene, Medford, or Spokane. So they are going to have to figure out some other way with stores they get divested in those outer markets. Really I think anyone who takes over Safeway stores in OR/WA will fail. The customer is too used to the Safeway offer; it isn't a great offer but throw up a QFC sign and suddenly all the problems Safeway had with prices, service, and quality that the customer just accepted with indifference for decades, the customer suddenly will take great issue with.

The QFC brand may do more harm than good, especially in Oregon where it is little known. I've been checking out the recently renamed/remodeled Albertson's on Barrow's Road in Beaverton. It's far busier now as a Safeway than it ever was as an Albertsons. The remodel freshened the store up but the merchandise didn't change. I believe simply the store name is driving more business since Safeway has a been reputation around here than Albertsons does. While we think name doesn't matter, it does as many consumer are not grocery and retail nerds like we are on this forum.

[retailfanmitchell019]

The QFC brand may do more harm than good, especially in Oregon where it is little known. I've been checking out the recently renamed/remodeled Albertson's on Barrow's Road in Beaverton. It's far busier now as a Safeway than it ever was as an Albertsons. The remodel freshened the store up but the merchandise didn't change. I believe simply the store name is driving more business since Safeway has a been reputation around here than Albertsons does. While we think name doesn't matter, it does as many consumer are not grocery and retail nerds like we are on this forum.

Safeway is definitely the stronger banner than Albertsons in the PNW, with the exception of the Rogue Valley in Southern Oregon (Medford/Grants Pass area where both banners each have 5 stores, although the Albertsons there are newer and higher volume), and Eugene/Springfield (where Albertsons outnumbers Safeway, 7 to 4).
Albertsons has actually never closed a store in the Eugene/Springfield area (they got back two divests to Haggen). Safeway in fact closed a store there that they bought back from Haggen. In the Rogue Valley, Albertsons hasn’t closed any stores either (apart from a divest to Haggen in Grants Pass that they never got back).

If the merger doesn’t go through, I expect the Albertsons banner will be eliminated in all of Washington and Oregon, with the exception of Eugene and the Rogue Valley, where Safeway will be rebranded to Albertsons.

[ClownLoach]

The QFC brand may do more harm than good, especially in Oregon where it is little known. I've been checking out the recently renamed/remodeled Albertson's on Barrow's Road in Beaverton. It's far busier now as a Safeway than it ever was as an Albertsons. The remodel freshened the store up but the merchandise didn't change. I believe simply the store name is driving more business since Safeway has a been reputation around here than Albertsons does. While we think name doesn't matter, it does as many consumer are not grocery and retail nerds like we are on this forum.

Safeway is definitely the stronger banner than Albertsons in the PNW, with the exception of the Rogue Valley in Southern Oregon (Medford/Grants Pass area where both banners each have 5 stores, although the Albertsons there are newer and higher volume), and Eugene/Springfield (where Albertsons outnumbers Safeway, 7 to 4).
Albertsons has actually never closed a store in the Eugene/Springfield area (they got back two divests to Haggen). Safeway in fact closed a store there that they bought back from Haggen. In the Rogue Valley, Albertsons hasn’t closed any stores either (apart from a divest to Haggen in Grants Pass that they never got back).

If the merger doesn’t go through, I expect the Albertsons banner will be eliminated in all of Washington and Oregon, with the exception of Eugene and the Rogue Valley, where Safeway will be rebranded to Albertsons.

No reason to take down a single Safeway sign though. Aside from those Southern Oregon locations I agree regardless of the merger status the Albertsons brand will finish disappearing from the PNW. Reputation was too badly tarnished, resulting in customers having a very passionate dislike for the brand. Where things are good there's zero reason to disrupt the market and create confusion. Just because it's fine now as 7 Albertsons/4 Safeway doesn't mean that people won't be up in arms if it's suddenly 11 Albertsons.

[SamSpade]

The QFC brand may do more harm than good, especially in Oregon where it is little known. I've been checking out the recently renamed/remodeled Albertson's on Barrow's Road in Beaverton. It's far busier now as a Safeway than it ever was as an Albertsons. The remodel freshened the store up but the merchandise didn't change. I believe simply the store name is driving more business since Safeway has a been reputation around here than Albertsons does. While we think name doesn't matter, it does as many consumer are not grocery and retail nerds like we are on this forum.

I was shocked how busy that store was the other day as I drove back past it after visiting the new(ish) Trader Joe's in Tigard. You'd never know that store was a portion of a former Albertsons, that's for sure (it also had issues... but that's another thread).

I guess people in Oregon really do prefer the Safeway name for whatever reason. Then again, the "Bethany," "West Hills," and "Fisher's Creek" (Vancouver, Wash.) QFC stores have perfectly acceptable Google ratings, pharmacy counters, and operate similarly to a local Safeway or Albertsons.

[storewanderer]

The QFC brand may do more harm than good, especially in Oregon where it is little known. I've been checking out the recently renamed/remodeled Albertson's on Barrow's Road in Beaverton. It's far busier now as a Safeway than it ever was as an Albertsons. The remodel freshened the store up but the merchandise didn't change. I believe simply the store name is driving more business since Safeway has a been reputation around here than Albertsons does. While we think name doesn't matter, it does as many consumer are not grocery and retail nerds like we are on this forum.

I was shocked how busy that store was the other day as I drove back past it after visiting the new(ish) Trader Joe's in Tigard. You'd never know that store was a portion of a former Albertsons, that's for sure (it also had issues... but that's another thread).

I guess people in Oregon really do prefer the Safeway name for whatever reason. Then again, the "Bethany," "West Hills," and "Fisher's Creek" (Vancouver, Wash.) QFC stores have perfectly acceptable Google ratings, pharmacy counters, and operate similarly to a local Safeway or Albertsons.

The problem with those QFCs (which appear to do just fine to me- and it will be interesting to see if they try to retain any of those and rebanner them to Safeway as they'd probably be more productive as Safeway) is they just seem to have a marginal quality product at a high price point. Like, their produce looks far worse than Fred Meyer produce. And it costs quite a bit more.

I am actually hopelessly optimistic that QFC may return to the old "quality" part of its name under C&S. With as poor as C&S perishables are, they will need a completely different strategy/buying program to make that happen. But there are a LOT of really good suppliers in OR/WA who could help make that happen across the various fresh departments. QFC still ran a more professional operation with a higher level of quality control back in the 2010 period, it really went downhill under Kroger in the past 5-8 years on its product quality and perimeter execution in my view.