🛒 Kroger-Albertsons Merger: National Impact

[storewanderer]

C&S appears to be a lot stronger financially than Fred's was though... but we don't really know because they are privately held.

I think they are going to have a hard time saying C&S is not in good enough financial condition to complete this transaction. This is a screaming bargain for C&S.

They need to bar Kroger from buying any of these stores back and building any new stores within x miles of the divested stores for a 10 year period. They did something like this with Albertsons/ASC merger in 1999. A state like California should take the lead here and start to make this kind of demand.

C&S was selected as the buyer for a reason and I think Kroger knows what they are doing. I am confident it is the Kroger side that pushed C&S as a buyer out of nowhere rather than the Save Mart operation run by an investment group that is former Cerberus people and with a bunch of veteran Albertsons LLC people in upper management that is clearly very well connected.

The larger issue is that in many areas, C and S is not a competitive chain. 4 stores in Utah, 66 stores in California, 26 stores in Texas, 2 in Louisiana, 2 in Montana...in these areas, this is not a viable chain unless they commit to opening more stores.

C&S supplies a lot of grocery products to Target. That in itself gives it a decent foundation.

They organically expanded into OR/WA a few years ago. It is my understanding they supply some kind of school lunch programs or other institutional customers in that territory, in addition to supplying Target. They haven't picked up many customers yet but they've picked up a few. Sid's IGA out in Long Beach, WA and the related ShopNKart operator out in Ocean Shores, WA are a couple stores C&S picked up (previous Supervalu customers).

I don't think C&S is a good buyer for these stores as they aren't a great wholesaler when it comes to supporting independents (perimeter, ad program, in store marketing materials, etc. are terrible or non-existent or they say to go see IGA) and have a very weak private label in Best Yet, but I do think C&S is a company that is stable financially and in business for the long haul.

[HCal]

Let's be real, C&S is not buying these stores. SoftBank is buying these stores. C&S is just the vehicle they are using to do so.

If this goes through, I think C&S will be mostly out of the retail business within 5-10 years. They might keep a few stores (Piggly Wiggly and some of the Kroger divests) but most of them will have been sold and/or redeveloped.

[ClownLoach]

Let's be real, C&S is not buying these stores. SoftBank is buying these stores. C&S is just the vehicle they are using to do so.

If this goes through, I think C&S will be mostly out of the retail business within 5-10 years. They might keep a few stores (Piggly Wiggly and some of the Kroger divests) but most of them will have been sold and/or redeveloped.

Softbank is a financier. If Kroger were backed by Wells Fargo it would make just as little sense to say Wells Fargo is really buying Albertsons.

Having said that, C&S does not seem to me like a long term operator either. I think that they serve as a sort of broker in the deal which simplifies the merger process as the feds only have to look into their viability. If they had to investigate dozens of buyers the deal would never get done. I think C&S quickly flips stores that competitors want to them, making a nice profit on the side, and then they offload the rest to independent operators. Basically anything that is being sold would have possibly been a merger related closure otherwise. Different players all accomplishing the same outcome.

[marshd1000]

It has been shown that Albertsons is ok with operating multiple banners in a region. Puget Sound for example has Albertsons, Safeway and Haggen. On the Kroger side of things it also has QFC and Fred Meyer. In the past, it seems that Kroger likes to have just one banner. But in the Puget Sound example, it operates two. So if this merger happens, will we see a situation where one banner is eliminated in favor of the other. I know that in Albertsons' home town of Boise, Fred Meyer is also strong. But to show that they are committed to Boise and the Albertsons banner, could Kroger eliminate the Fred Meyer name in Boise? It seems to me that there would be an advantage to converting Fred Meyer stores in the Boise area to Albertsons Marketplace. That advantage would be to keep the Albertsons name strong there. I'm saying that because I'm guessing that some Albertsons are going to become QFC.

Also, I know Kroger is keeping the Signature brand. So I'm guessing that the Kroger brand is going away. Also, isn't the merged company going to have a new name? Since Open Nature is being sold to C&S, I'm guessing that Simple Truth is replacing it. But I'm also guessing that Simple Truth Organic is being replaced by O Organics? One no brainer is keeping Lucerne and spreading it throughout the new company. I noticed that lately Kroger is promoting its new deli fried chicken recipe. I tasted it and it seems a lot like Albertsons. So I'm wondering if they will go with the Albertsons recipe? Also will King Soopers keep Chester's Fried Chicken in its stores?

[storewanderer]

It has been shown that Albertsons is ok with operating multiple banners in a region. Puget Sound for example has Albertsons, Safeway and Haggen. On the Kroger side of things it also has QFC and Fred Meyer. In the past, it seems that Kroger likes to have just one banner. But in the Puget Sound example, it operates two. So if this merger happens, will we see a situation where one banner is eliminated in favor of the other. I know that in Albertsons' home town of Boise, Fred Meyer is also strong. But to show that they are committed to Boise and the Albertsons banner, could Kroger eliminate the Fred Meyer name in Boise? It seems to me that there would be an advantage to converting Fred Meyer stores in the Boise area to Albertsons Marketplace. That advantage would be to keep the Albertsons name strong there. I'm saying that because I'm guessing that some Albertsons are going to become QFC.

Also, I know Kroger is keeping the Signature brand. So I'm guessing that the Kroger brand is going away. Also, isn't the merged company going to have a new name? Since Open Nature is being sold to C&S, I'm guessing that Simple Truth is replacing it. But I'm also guessing that Simple Truth Organic is being replaced by O Organics? One no brainer is keeping Lucerne and spreading it throughout the new company. I noticed that lately Kroger is promoting its new deli fried chicken recipe. I tasted it and it seems a lot like Albertsons. So I'm wondering if they will go with the Albertsons recipe? Also will King Soopers keep Chester's Fried Chicken in its stores?

Generally the multiple Kroger banners in a region is due to different formats.

Smiths and Fred Meyer in Southern Idaho
F4L and Ralphs in CA
QFC and Fred Meyer in OR/WA
Ruler and Kroger in some spots
Mariano's and F4L in Chicago

I'd expect to see Albertsons and Fred Meyer continue in Boise as separate formats. Both store bases are sort of far from distribution points and we don't know yet what distribution points are being sold. Is that Albertsons distribution in Salt Lake City going to be sold to C&S? So then Smiths will start supplying what is left of the Boise Albertsons units? The Idaho Fred Meyer units are primarily still supplied by Fred Meyer OR distribution for pretty much everything but they receive milk/some dairy from Smiths (this started before Kroger and has just continued).

The one place where we saw an odd move was with Kroger and Harris Teeter in Raleigh and they ultimately closed Kroger there but it was after quite a few years. Not unlike how they closed Harris Teeter in Nashville and kept Kroger there. I think there are still some places where Kroger and Harris Teeter co-exist?

I don't really think much of what you are predicting on private label will happen. Kroger is heavily marketing the Kroger brands on an ongoing basis throughout their banners. Replacing that with the weak, confused Signature Select (since the sub Signatures like Farms, Health, etc. are all in the process of being discontinued) line would be a fatal mistake. I'd go with a new line entirely before going with Signature Select.

Had Albertsons run its private label program properly and kept Signature Select as a "premium quality" label on limited SKUs as the label was designed to be by Safeway as a premium label, I would have said they should replace Private Selection with that as PS is rather weak. Definitely weaker than the old Safeway Select line under Safeway was through the Albertsons merger. But they didn't do that.

The new fried chicken at Kroger is a double breaded type, to me the breading seems drier/crispier than Albertsons. Albertsons is a very "moist" fried chicken not exactly crispy. It seems to be getting mixed reviews, I've heard positive and negative comments on it. They aren't marketing it much yet so I am curious if they are quietly testing it before a formal marketing push on it. When it comes to Kroger and hot food I've had so much awful tasting stuff from them even when I get something that is pretty good it is hard to get my hopes up for how it will be long term.

[retailfanmitchell019]

The new fried chicken at Kroger is a double breaded type, to me the breading seems drier/crispier than Albertsons. Albertsons is a very "moist" fried chicken not exactly crispy. It seems to be getting mixed reviews, I've heard positive and negative comments on it. They aren't marketing it much yet so I am curious if they are quietly testing it before a formal marketing push on it. When it comes to Kroger and hot food I've had so much awful tasting stuff from them even when I get something that is pretty good it is hard to get my hopes up for how it will be long term.

I’ve heard Albertsons fried chicken in some places, like Boise, has run circles around KFC on price and quality.

[SamSpade]

Off Topic

I’ve heard Albertsons fried chicken in some places, like Boise, has run circles around KFC on price and quality.

After this board led me to the Safeway and Albertsons reddit communities, obviously some employees hate having to fresh prepare chicken (and in some Safeway markets, Asian cuisine and sandwich bars), but I personally love "Cheap Chicken Monday" which bled over into what is now called "Friday Frenzy" in this area (can't price everything at $5 any longer).

Also, they make excellent jojo potatoes.

Pricing is definitely lower than KFC or Popeyes at this point. While waiting in Las Vegas through a well managed line on Thanksgiving, I saw that someone had ordered a catering level order of like 3 buckets of the fried chicken for their Thanksgiving table.

[retailfanmitchell019]

More merger news:

FTC decision on Kroger/Albertsons merger won’t happen by December 15: https://seekingalpha.com/news/4044768-f ... ext-report

“Mad Money” host Jim Cramer says government will stop the Kroger/Albertsons merger:

By telling the Feds that the requirements have been met, Kroger is really raising the “Mission Accomplished” banner, figuratively speaking. That’s all I have to say for now.

[storewanderer]

More merger news:

FTC decision on Kroger/Albertsons merger won’t happen by December 15: https://seekingalpha.com/news/4044768-f ... ext-report


By telling the Feds that the requirements have been met, Kroger is really raising the “Mission Accomplished” banner, figuratively speaking. That’s all I have to say for now.

Kroger has to do that. They signed the merger agreement and it is their duty to do everything in appearance and form to push the merger through in order to meet their commitment to Albertsons and its shareholders. Due to the structure of Albertsons the common shareholders don't get to vote on this merger so it is basically Cerberus and friends who control Albertsons who want this merger (and Kroger as a willing partner).

If Kroger did not meet the requirements by that stated deadline (was it 11/15?), they'd be in breach and Cerberus and friends could try to go after them if the merger ended up failing and could blame it on Kroger.

I am wondering if they will follow the path of Speedway/7-Eleven and try to self-divest and just merge without FTC approval then after the FTC whimpered and just approves whatever Kroger/Albertsons cook up on their own. I wonder if the unions/AGs could file some kind of injunction that would prevent that from actually happening. Obviously with Speedway/7-Eleven no union involved and stores with only a handfull of employees it was a different situation and they were able to push through the combination without FTC approval when nobody was even paying attention and found willing buyers to buy the stores.

[marshd1000]

This might be a crazy thought but if the merger doesn’t happen, do you think Albertsons might try to buy Rite Aid out of bankruptcy? I’m thinking that looking in retrospect, Rite Aid shareholders wouldn’t be holding worthless stock right now had they allowed the Albertsons Rite Aid merger to happen!