🛒 Kroger-Albertsons Merger: National Impact

[veteran+]

I don't expect ACI's performance improvements to continue in the coming months. I am seeing execution issues popping up, at multiple stores, and the pricing decisions they are making lately are perplexing.

Maybe they can fix things for the holidays but that remains to be seen.

Kroger - I don't know.

I am starting to think of life past both of these chains. You have the Safeway chain that has terrible pricing, decent store environment, marginal quality, and a private label program so poorly priced/poorly promoted they could probably discontinue the whole program and few customers would notice or care; and you have the Kroger chains with better pricing, questionable quality, an outstanding private label program, and awful store environment. There are so many other options... in most markets...

So in my area, what options?

[BillyGr]

There are so many other options... in most markets...

If you want a market with absolutely zero Kroger/Albertsons presence, Minneapolis/St. Paul is the answer (where the grocery market has been a tough place for national chains to enter), along with San Antonio (HEB’s hometown), Kansas City (another tough place for national chains), Cleveland and Pittsburgh (Giant Eagle is the dominant traditional chain, but Cleveland has a Meijer presence), Oklahoma (a state lacking in strong traditional grocers, as Walmart has a monopoly there), and Western Michigan (Meijer’s home turf).

Or, just move to Canada, where Kroger and Albertsons will never have a presence in. But that’s easier said than done…

Don't forget the majority of New York State as having neither (there is a tiny Acme presence in the southern part of the state near NYC via the few A&P locations they bought out, but nothing else for the rest of the state).

[mjhale]

I don't expect ACI's performance improvements to continue in the coming months. I am seeing execution issues popping up, at multiple stores, and the pricing decisions they are making lately are perplexing.

I'm noticing a smaller weekly ad flyer and less aggressive Just 4 U offers. Also, Safeway has been raising prices again especially on center store, bakery and fluid dairy. For instance, a Safeway brand honey bear is now $5.49. A dollar more than a local brand that I can get at Giant. Two cookies in the bakery are up to $3.00 from $1.50 last year. A half gallon of lactose free milk is $4.29-4.69 versus $3.99 at Giant. A pack of 10 drink mix packets is $3.49 as opposed to $2.09 at Giant. Believe it or not these drink mix packets got as high as $5 at Safeway... It seems like Safeway realized their numbers weren't what they wanted them to be because they had gotten more aggressive with pricing and specials. Now they are making up for lost time.

[ClownLoach]

I don't expect ACI's performance improvements to continue in the coming months. I am seeing execution issues popping up, at multiple stores, and the pricing decisions they are making lately are perplexing.

I'm noticing a smaller weekly ad flyer and less aggressive Just 4 U offers. Also, Safeway has been raising prices again especially on center store, bakery and fluid dairy. For instance, a Safeway brand honey bear is now $5.49. A dollar more than a local brand that I can get at Giant. Two cookies in the bakery are up to $3.00 from $1.50 last year. A half gallon of lactose free milk is $4.29-4.69 versus $3.99 at Giant. A pack of 10 drink mix packets is $3.49 as opposed to $2.09 at Giant. Believe it or not these drink mix packets got as high as $5 at Safeway... It seems like Safeway realized their numbers weren't what they wanted them to be because they had gotten more aggressive with pricing and specials. Now they are making up for lost time.

Remember the big chains like to raise prices to lower them for big holidays... I expect they will be more aggressive this year in advertising massive sales for Thanksgiving, Christmas etc.

I saw turkeys priced at $3.49 a pound in a freezer today for house brand and laughed my head off, obviously they're not going to sell for anything close to that.

There also seems to be a lagging effect of gas prices, they went up right when prices were stabilizing and even dropping. It's like the stores have raised prices even though the gas prices dropped back down.

[retailfanmitchell019]

I'm noticing a smaller weekly ad flyer and less aggressive Just 4 U offers. Also, Safeway has been raising prices again especially on center store, bakery and fluid dairy. For instance, a Safeway brand honey bear is now $5.49. A dollar more than a local brand that I can get at Giant. Two cookies in the bakery are up to $3.00 from $1.50 last year. A half gallon of lactose free milk is $4.29-4.69 versus $3.99 at Giant. A pack of 10 drink mix packets is $3.49 as opposed to $2.09 at Giant. Believe it or not these drink mix packets got as high as $5 at Safeway... It seems like Safeway realized their numbers weren't what they wanted them to be because they had gotten more aggressive with pricing and specials. Now they are making up for lost time.

I’d expect Safeway to exit the Eastern Seaboard region anyway assuming the merger doesn’t go through.

[storewanderer]

So in my area, what options?

Whole Foods, Trader Joe's, Sprouts, Grocery Outlet, regional operators (Gelson's, Bristol Farms), various ethnic operators (Asian, Hispanic, Middle Eastern, European, Indian), Wal Mart, Target, Stater... I think if we started tracking it we would see each month in SoCal 3-4 new full size grocery stores are opening by these independent/ethnic/regional operators. Meanwhile Vons/Ralphs/Albertsons it feels like they've opened 3-4 new (not relocation) stores total collectively in SoCal over the past decade.

[veteran+]

In a 5 mile radius of my particular location (not counting driving North over the hill into the Valley, which is HELL) the options for a one trip full shop is Pavilions $$, and all the nasty Ralphs.

If "non-foods" is not important then Whole Foods $$$, Gelson's $$$, Bristol Farms $$$ are options.

No Walmarts and Grocery Outlets (would never go there), no SuperTargets, 1 Albertsons too far away (time wise), 1 Vons too far away (time wise) and icky neigborhood (same with ethnic though I would not shop there anyway), no Staters, and the niche stores on their best day (Traders, Sprouts and Erewhon $$$$) are not one stop shopping.

This is a popular complaint in my general area because of the condition of Ralphs and the lack of locations for Vons and Albertsons close to us (time wise).

[retailfanmitchell019]

In a 5 mile radius of my particular location (not counting driving North over the hill into the Valley, which is HELL) the options for a one trip full shop is Pavilions $$, and all the nasty Ralphs.

If "non-foods" is not important then Whole Foods $$$, Gelson's $$$, Bristol Farms $$$ are options.

No Walmarts and Grocery Outlets (would never go there), no SuperTargets, 1 Albertsons too far away (time wise), 1 Vons too far away (time wise) and icky neigborhood (same with ethnic though I would not shop there anyway), no Staters, and the niche stores on their best day (Traders, Sprouts and Erewhon $$$$) are not one stop shopping.

This is a popular complaint in my general area because of the condition of Ralphs and the lack of locations for Vons and Albertsons close to us (time wise).

Everything Stater Bros. has in LA County is east of the 710 freeway (except for the stores they have in the northern LA exurbs, Santa Clarita and Lancaster/Palmdale, they also have a former Vons in Simi Valley that they picked out of the Haggen trainwreck).

A five mile radius from my house is Albertsons country. No Vons though.

[mjhale]

I’d expect Safeway to exit the Eastern Seaboard region anyway assuming the merger doesn’t go through.

What is your reasoning on this?

[retailfanmitchell019]

FTC possibly wrapping up compliance relating to the Kroger/Albertsons merger:
https://www.winsightgrocerybusiness.com ... ets-closer
"Citing a posting on X from investigative M&A news service Dealreporter, investor website Seeking Alpha reported last week that Kroger and Albertsons were slated to certify “substantial compliance” with the FTC’s second information request around Nov. 15, and the transaction wouldn’t close prior to Feb. 13. The Dealreporter post said the information request compliance date was stated in the “Whalen shareholder lawsuit,” a consumer suit against the merger that was dismissed back in August."
The merger agreement does contain a termination date of at least Jan, 13, 2024, according to SEC filings. However, the termination date can be extended in 30 day blocks until October 9, 2024. Right in the middle of election season.

Note how this article says "C&S is a a large, experienced and unionized grocery industry player". Oh, you meant the de facto successor to Fleming, who was inept at running its own corporate retail? C&S only operates 11 retail stores, they are 99.9% a wholesaler.
C&S is backed by the Japanese bank SoftBank for this deal. I suspect C&S is the puppet, with SoftBank pulling the strings of C&S to flip the divested stores for real estate by 2025 (SoftBank is into real estate). Will turn out similar to the Haggen trainwreck wherein Comvest was using Haggen to buy Albertsons/Safeway divests and flip the stores for real estate months later. I still believe Haggen was used by Comvest as a space-filler in SoCal/NV/AZ.

Lina Khan, the FTC Chair, has been doing town halls relating to the merger. People at the town halls have been mentioning the Haggen trainwreck, even in Denver, where nothing was divested.

AG Bonta here in CA is still deciding if the state of California will sue Kroger.

I'm still praying this merger is stopped.