Kroger to merge with Albertsons?

[ClownLoach]

They will not do well in Philly--Shop-Rite is the kind of operation that drove them out of markets in the past and they also are a factor in Baltimore, but the Eastern markets are probably less of a concern for them in the short run.

Given how awful Acme in the Philly area is already, I really don't see how Kroger could be any worse . Pricing is absolutely horrible and completely noncompetitive. It wasn't great under SuperValu/Albertsons, but became even worse under Safeway (you would have thought they would have learned from Genuardi's, but no). The stores themselves are completely mediocre in every way imaginable (the only slight advantage they have is meat quality/selection, but even that isn't enough to really stand out), and whatever remodels they have done in the last few years (nicknamed the 'Quality Built' package) are completely lifeless. Their biggest competitor, Giant, has been pushing hard into Philadelphia itself in the last few years and has got to be taking away a lot of their business in their last real stronghold (their suburban locations have been slowly disappearing as soon as Giant, Wegmans, and to a lesser extend, ShopRite, have exploded). All Kroger really has to do is come in and lower prices even just a bit, and maybe they'll have a chance.

Kroger's terrible propaganda presentation on why they should merge is exhibit #1 here. They have suffered worse margin deterioration than Albertsons over the last few years, and thus any promise that they will lower prices is to be viewed with suspicion. If anything, their acquisition of Albertsons would potentially help them learn new ways to increase prices without losing business or upsetting customers - something that the improving sentiments about Albertsons indicate they can do very well. Their business results indicate a need to increase prices. (Although when I visit any Ralphs these days it looks like plenty of price increases are going around).

[pseudo3d]

It is a wonder why Kroger has never been interested in buying one of the Hispanic-oriented chains in California or even Texas

They seem to have given up on the "Mercado" moniker and instead remerchandise the inside into an hispanic format.

There is this.

https://www.supermarketnews.com/retail- ... anic-focus

First of its kind in the chain? Juice bar? Ceviche? Seems like they forgot about Fry's Mercado.

I guess technically it may be the "first *Kroger*" to offer these things.

Kroger tried to make a splash in Houston with a Hispanic-focused store (picture) but it was a big failure. From independent reports of other Houston retail enthusiasts, the "new" Kroger store (which started life as an Albertsons) barely has anything except the ceviche, juice bar, and some new "pan dulces" in the bakery (which I imagine taste awful).

[retailfanmitchell019]

The merger hasn’t been stopped yet, but the Feds are staring to put the hammer down: https://www.supermarketnews.com/retail- ... ons-merger

[submariner]

I laugh that the plans call for splitting up the Albertsons banner... *again*. I'd argue that almost killed the brand from a customer favourability point of view... How can you set your expectations on a store which will vary wildly between operating companies? Especially when C&S has an extremely weak private brand portfolio compared to Kroger or Safeway/Albs.

[ClownLoach]

The merger hasn’t been stopped yet, but the Feds are staring to put the hammer down: https://www.supermarketnews.com/retail- ... ons-merger

Kahn sounds weak. "We aren't really even able to enforce the rules." Really? Then what exactly are you there for? Idle commentary? That's what we all do here for free (and arguably better), we don't need to pay a government official for it.

I don't care for the deal but when I hear Kahn complaining about the Haggen thing I have to say "and who approved that? And who ordered up those stores to be sold?" ZERO accountability from the FTC, who does have the power to completely shut down and immobilize companies if they choose to... I've even seen them take over a company entirely, freeze every asset, shut it down and screw over all the employees who didn't get their paychecks while the FTC seized all their money over a "disagreement" not even a conviction!

The damage done was more from the closing of those locations the FTC ordered sold that never reopened as a traditional supermarket than anything else. I'd argue that Albertsons and Safeway are better today together than they were separately which is disturbing. But they're still collectively garbage at least in SoCal along with Ralphs.

I mean seriously, the bar is set so low right now for Kroger and Albertsons that I've been talking for a week about how Target does a better job. Seriously, Target? We know how broken that grocery operation is even if they've fixed half of it's issues there are still tens of thousands of problems still to be corrected. At this point I honestly don't even care as long as somehow they figure out how to keep them all open and running. Even in the aftermath of Haggen California division I'll still say that it's going to be tough work to be much worse than Ralphs and Vons in SoCal. Either kill the entire deal or just let it go and let's see if C&S can improve whatever units they bought, they probably can't be much worse honestly.

[retailfanmitchell019]

The merger hasn’t been stopped yet, but the Feds are staring to put the hammer down: https://www.supermarketnews.com/retail- ... ons-merger

Kahn sounds weak. "We aren't really even able to enforce the rules." Really? Then what exactly are you there for? Idle commentary? That's what we all do here for free (and arguably better), we don't need to pay a government official for it.

“If there’s a merger that is presenting a lot of risk of reducing competition, may even create a monopoly…we need to weigh those risks, and especially given that some of these remedies in the past have failed,” Kahn told KLAS.

“Historically, enforcers sometimes have allowed mergers to go through and accept those promises and commitments,” Kahn continued. “But historically, it’s been very difficult to even enforce them.”
She means historically (really since the deregulation in the 80s that gave rocket fuel to Walmart and forced the competition to consolidate). I'm hoping Khan is tougher than the previous FTC chairs who let other retail mergers slide through (like 7-Eleven/Speedway).

I still think the merger is on the way to being cancelled.

Not even a few days ago, you mentioned that Kroger selling off their West Coast assets is more likely than the merger being completed. I'd guess Save Mart's management team was set up for this exact reason, especially if they kick the tires at Ralphs.
We all know who'd buy Fred Meyer... a Midwestern superstore chain with a similar name.

[pseudo3d]

I laugh that the plans call for splitting up the Albertsons banner... *again*. I'd argue that almost killed the brand from a customer favourability point of view... How can you set your expectations on a store which will vary wildly between operating companies? Especially when C&S has an extremely weak private brand portfolio compared to Kroger or Safeway/Albs.

It's made even worse by the fact that it looks like stores, especially in Colorado, will be flipped to the Albertsons banner. In the case of SuperValu, there was no flipping of any banners...the stores went with SuperValu or stayed with LLC, depending on the market. On a consumer side of view, the change was almost invisible...well, until operations started to deteriorate, anyway.

[jamcool]

The merger hasn’t been stopped yet, but the Feds are staring to put the hammer down: https://www.supermarketnews.com/retail- ... ons-merger

Kahn sounds weak. "We aren't really even able to enforce the rules." Really? Then what exactly are you there for? Idle commentary? That's what we all do here for free (and arguably better), we don't need to pay a government official for it.

“If there’s a merger that is presenting a lot of risk of reducing competition, may even create a monopoly…we need to weigh those risks, and especially given that some of these remedies in the past have failed,” Kahn told KLAS.

“Historically, enforcers sometimes have allowed mergers to go through and accept those promises and commitments,” Kahn continued. “But historically, it’s been very difficult to even enforce them.”
She means historically (really since the deregulation in the 80s that gave rocket fuel to Walmart and forced the competition to consolidate). I'm hoping Khan is tougher than the previous FTC chairs who let other retail mergers slide through (like 7-Eleven/Speedway).

I still think the merger is on the way to being cancelled.

Not even a few days ago, you mentioned that Kroger selling off their West Coast assets is more likely than the merger being completed. I'd guess Save Mart's management team was set up for this exact reason, especially if they kick the tires at Ralphs.
We all know who'd buy Fred Meyer... a Midwestern superstore chain with a similar name.

Fred Meyer is too dominant in the PNW for Kroger to sell off-and is the basis of their Marketplace concept in other markets.

[HCal]

I laugh that the plans call for splitting up the Albertsons banner... *again*. I'd argue that almost killed the brand from a customer favourability point of view... How can you set your expectations on a store which will vary wildly between operating companies? Especially when C&S has an extremely weak private brand portfolio compared to Kroger or Safeway/Albs.

Most people don't shop for groceries in multiple states, so I don't think the different operating companies makes any difference. People are just familiar with their local stores. I think the brand was almost killed because Supervalu had no idea how to run a large supermarket chain, given that they were primarily a wholesaler. If this deal goes through, C&S will likely have the same problem.

[storewanderer]

I laugh that the plans call for splitting up the Albertsons banner... *again*. I'd argue that almost killed the brand from a customer favourability point of view... How can you set your expectations on a store which will vary wildly between operating companies? Especially when C&S has an extremely weak private brand portfolio compared to Kroger or Safeway/Albs.

Most people don't shop for groceries in multiple states, so I don't think the different operating companies makes any difference. People are just familiar with their local stores. I think the brand was almost killed because Supervalu had no idea how to run a large supermarket chain, given that they were primarily a wholesaler. If this deal goes through, C&S will likely have the same problem.

Some people do shop for groceries in multiple states and they often look for a familiar store. "Albertsons" as a brand does have pretty good name recognition (people know it is a grocery store). With Supervalu and Albertsons LLC they still had common private label, shelf tags looked the same, Preferred Card was in use at Supervalu but not LLC but the average customer didn't have any connection to the Preferred Card, and while LLC did a much different promotional strategy with stronger pricing I don't think that was enough to mess up the image customers may have had who shopped between banners. So to that point if all parties that operate "Albertsons" stores operate them to somewhat of a uniform standard, it is okay. For instance today those NM Albertsons "Market" Stores are completely different from any other "Albertsons" as they run United-TX program; they have Signature private labels and the interiors "look" like an Albertsons elsewhere but the loyalty program is different, merchandising is different, pricing scale is way different, they don't even use the same POS systems.

However if the C&S-affiliated Piggly Wiggly I went to in WI a week and a half ago is any indication, I can tell you, if someone tried to run an Albertsons the way that completely pathetic store was run, a customer wouldn't go back to ANY Albertsons anytime soon unless they were desperate, and maybe not even then. That was the second worse store I saw back in the IA/IL/WI circle I made (worst goes to a debranded Save a Lot housed in a former Eagle trying to run with a limited assortment of AWG brands). And I had no idea it was even C&S handling that franchise (I sure hope it was a franchise and not one of the 8 corporate run stores...) since it had Food Club private label, I assumed it was handled by some regional supplier... I learned C&S was supplying it and managing that Piggly Wiggly franchise program back there a week after returning from that trip.

Part of the problem I have is they don't even split Albertsons up in a contiguous (sp?) manner. CA, CO, AZ, WY? Also I am going to throw this out there- I think the Albertsons name is less valuable in CO than it would be in OR/WA (despite Supervalu's major issues in those states). I get that they have QFC for those states, so okay, they maybe didn't need Albertsons there.

And from a merchandising perspective this is screwed up. NV (Las Vegas) needs to be connected to either CA or AZ. For the purposes of marketing, loyalty cards, and operational efficiency it makes sense for C&S to form a "Southwest" division to handle SoCal, NV, AZ, and NM. But the way this is going they will be using Albertsons banner in CA/AZ, and then I assume QFC banner in NV/NM/UT/TX.

For instance at present in Las Vegas a significant portion of the marketing, policy posters, etc. you see at Albertsons there contains three logos- Albertsons/Safeway/Vons. But C&S won't be able to do a combined marketing or policy poster that shows QFC/Albertsons logos there because the Albertsons that remain in Las Vegas will be part of Kroger. That sort of thing.