And evidently the ROI isn't worth it to build new stores in California either since they aren't doing that. Which is my entire point here. The operation is not run consistently with how the rest of Kroger is run... In my opinion they should be opening 3-5 (net of closures) new stores per year in growing parts of SoCal and expanding further out of Los Angeles. They aren't. Stores they opened in the 2000's - too many closed. Safeway/Vons opened a lot of new stores in CA in the 2000's- how many of those have closed? Very few. And they are positioned better throughout the state because of it. Look at Denver and you have opposite situation- Kroger is the one who built more stores, Safeway is the one who has multiple 2000's build stores that closed... of course this type of example is probably why they think merging is a good idea...HCal wrote: ↑February 11th, 2024, 5:58 pmRevenue only matters if it improves profits. Based on our discussion in the pharmacy forum, the insurance industry is so messed up right now that a lot of retail pharmacies aren't profitable. There is a reason why so many regional supermarkets are closing their pharmacies. A Kroger pharmacy might help drive customer engagement, but if the store is already busy then that may not make much difference.storewanderer wrote: ↑February 11th, 2024, 1:35 am That matters because the average Ralphs cannot bring in as much revenue as larger stores in surrounding divisions. Additions like fuel and Pick Up were considered additional revenue for the stores and that has been very important to Kroger. The pharmacy is very important to Kroger, most of their divisions have very busy pharmacies, there is a loyalty tie in to pharmacy (fuel points with prescription fills). By having additional services like fuel and pharmacy Kroger is able to make more money off of each customer vs. the Ralphs situation where people "just go there to buy groceries" then stop at the Arco/Shell/Chevron down the road for gas and hit the CVS for prescriptions.
Same with gas stations. Most independent gas stations make far more on their convenience store than on the gas. I would think the only real value in Kroger's fuel stations is the fuel points program which boosts grocery sales, but that can easily be accomplished through a tie-in with another company (such as Shell in California).
So in the end, I think that Kroger may simply not see the need for these things in California. There isn't space, and customer counts are already sufficient. That doesn't mean the stores are struggling or unable to keep up, it just means that the ROI isn't worth it like it might be in other parts of the country.
🛒 Kroger-Albertsons Merger: National Impact
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Re: 🛒 Kroger-Albertsons Merger: National Impact
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Re: 🛒 Kroger-Albertsons Merger: National Impact
The mystery is why don't new stores work for Ralphs, but they work for Stater?storewanderer wrote: ↑February 11th, 2024, 8:57 pmAnd evidently the ROI isn't worth it to build new stores in California either since they aren't doing that. Which is my entire point here. The operation is not run consistently with how the rest of Kroger is run... In my opinion they should be opening 3-5 (net of closures) new stores per year in growing parts of SoCal and expanding further out of Los Angeles. They aren't. Stores they opened in the 2000's - too many closed. Safeway/Vons opened a lot of new stores in CA in the 2000's- how many of those have closed? Very few. And they are positioned better throughout the state because of it. Look at Denver and you have opposite situation- Kroger is the one who built more stores, Safeway is the one who has multiple 2000's build stores that closed... of course this type of example is probably why they think merging is a good idea...HCal wrote: ↑February 11th, 2024, 5:58 pmRevenue only matters if it improves profits. Based on our discussion in the pharmacy forum, the insurance industry is so messed up right now that a lot of retail pharmacies aren't profitable. There is a reason why so many regional supermarkets are closing their pharmacies. A Kroger pharmacy might help drive customer engagement, but if the store is already busy then that may not make much difference.storewanderer wrote: ↑February 11th, 2024, 1:35 am That matters because the average Ralphs cannot bring in as much revenue as larger stores in surrounding divisions. Additions like fuel and Pick Up were considered additional revenue for the stores and that has been very important to Kroger. The pharmacy is very important to Kroger, most of their divisions have very busy pharmacies, there is a loyalty tie in to pharmacy (fuel points with prescription fills). By having additional services like fuel and pharmacy Kroger is able to make more money off of each customer vs. the Ralphs situation where people "just go there to buy groceries" then stop at the Arco/Shell/Chevron down the road for gas and hit the CVS for prescriptions.
Same with gas stations. Most independent gas stations make far more on their convenience store than on the gas. I would think the only real value in Kroger's fuel stations is the fuel points program which boosts grocery sales, but that can easily be accomplished through a tie-in with another company (such as Shell in California).
So in the end, I think that Kroger may simply not see the need for these things in California. There isn't space, and customer counts are already sufficient. That doesn't mean the stores are struggling or unable to keep up, it just means that the ROI isn't worth it like it might be in other parts of the country.
New stores usually mean many years of positive comp sales as they grow to maturity with the local community. Comp sales outweigh even earnings to Wall Street, which means there is usually a heavy incentive to keep opening stores in companies that have not reached "capacity" nationwide.
So there is something way "off" with the expense model of Ralphs if these new stores hurt the division financials so much while they're in early stages.
For example CVS specifically plans every new store as just needing to break even then remain positive by the time it hits ten years old. I wonder what kind of expectations they were putting on new Ralphs sites? Did they actually expect profitability on day one or they won't build? In a high labor cost market like California that just doesn't happen. Pre-Kroger, every one of the recent new Stater Bros openings would have been a Ralphs for sure. Their exact type of shopping centers, store size, demographics etc. I also think many of the Ralphs early 2000s stores should not have closed (separate of the Norcal and points north expansion issues).
Ralphs has both lost billions and left billions on the table.
Maybe there's something to be said for the Vons and Albertsons model of more stores each doing less volume? I wonder if the costs are actually lower because they don't require the constant restocking throughout the day, extra deliveries, etc. Probably the most extreme example of that theory is Publix. But there really is a point where the profitability no longer scales once a store gets too busy, especially when it's physically too small like many LA Ralphs stores. I think they run much higher payrolls because of the excessive workload. Sell more but make less.
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Re: 🛒 Kroger-Albertsons Merger: National Impact
Kroger really grasping at straws coming out with this pr today. Adding nothing they haven't already said.
Everyone in DC already knows the FTC is going to sue to block. Joined by multiple states.
Kroger to Lower Prices Following Merger with Albertsons Cos
https://www.prnewswire.com/news-release ... 59961.html
Everyone in DC already knows the FTC is going to sue to block. Joined by multiple states.
Kroger to Lower Prices Following Merger with Albertsons Cos
https://www.prnewswire.com/news-release ... 59961.html
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Re: 🛒 Kroger-Albertsons Merger: National Impact
With the high costs these days of basic projects, their $2.5M per store investments probably covered only the IT conversion costs and maybe a few basic energy saving jobs like LED lighting conversion. A remodel is out of the question on such a low budget.CalItalian wrote: ↑February 13th, 2024, 11:27 am Kroger really grasping at straws coming out with this pr today. Adding nothing they haven't already said.
Everyone in DC already knows the FTC is going to sue to block. Joined by multiple states.
Kroger to Lower Prices Following Merger with Albertsons Cos
https://www.prnewswire.com/news-release ... 59961.html
"Investing" in lowering prices is an illogical argument.
It is obvious that an announcement of a lawsuit to block the merger is imminent, which is the only reason to send a bogus press release like this out.
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Re: 🛒 Kroger-Albertsons Merger: National Impact
ClownLoach wrote: ↑February 13th, 2024, 2:31 pmWith the high costs these days of basic projects, their $2.5M per store investments probably covered only the IT conversion costs and maybe a few basic energy saving jobs like LED lighting conversion. A remodel is out of the question on such a low budget.CalItalian wrote: ↑February 13th, 2024, 11:27 am Kroger really grasping at straws coming out with this pr today. Adding nothing they haven't already said.
Everyone in DC already knows the FTC is going to sue to block. Joined by multiple states.
Kroger to Lower Prices Following Merger with Albertsons Cos
https://www.prnewswire.com/news-release ... 59961.html
"Investing" in lowering prices is an illogical argument.
It is obvious that an announcement of a lawsuit to block the merger is imminent, which is the only reason to send a bogus press release like this out.
Someone here calculated that the "lower prices" when actually divvied up among stores and items would be trivial.
I find it interesting it's Kroger putting out the press release, not Albertsons. Albertsons' shareholders would have the most to lose if the deal doesn't go through, while Kroger gains practically nothing as far as new stuff goes. The thing about Albertsons and Safeway was that they had a lot of the back office support (IT, store brands) that Albertsons wanted. The new territory brought them back into Texas, NorCal, and a few other places never visited (Hawaii, Alaska, Washington DC) but that wasn't the point.
Kroger's new territory is more of the same--Austin, Louisiana, NorCal, Hawaii, and the Northeast, but unlike Safeway/Albertsons, Kroger already has a robust manufacturing arm, they already have the back office support, and in many cases, they have the better stores. If they wanted to expand through acquisition, there are probably half a dozen smaller chains they could immediately start looking into, especially if they dropped their arrogant position of only taking the best.
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Re: 🛒 Kroger-Albertsons Merger: National Impact
Stater actually builds the store and prices/merchandises it to get the neighborhood to shop there. Ralphs basically failed at that- prices too high and didn't capture traffic properly with those 2000's stores (and the entire NorCal operation). Price was the biggest fail at Ralphs in the 2000's. Also dumb initiatives like being Open 24 Hours, again, cost money... didn't make sense in the locations. Double coupons were also probably bad, should have had lower shelf prices. At least in NorCal.ClownLoach wrote: ↑February 11th, 2024, 10:31 pm
The mystery is why don't new stores work for Ralphs, but they work for Stater?
New stores usually mean many years of positive comp sales as they grow to maturity with the local community. Comp sales outweigh even earnings to Wall Street, which means there is usually a heavy incentive to keep opening stores in companies that have not reached "capacity" nationwide.
So there is something way "off" with the expense model of Ralphs if these new stores hurt the division financials so much while they're in early stages.
For example CVS specifically plans every new store as just needing to break even then remain positive by the time it hits ten years old. I wonder what kind of expectations they were putting on new Ralphs sites? Did they actually expect profitability on day one or they won't build? In a high labor cost market like California that just doesn't happen. Pre-Kroger, every one of the recent new Stater Bros openings would have been a Ralphs for sure. Their exact type of shopping centers, store size, demographics etc. I also think many of the Ralphs early 2000s stores should not have closed (separate of the Norcal and points north expansion issues).
Ralphs has both lost billions and left billions on the table.
Maybe there's something to be said for the Vons and Albertsons model of more stores each doing less volume? I wonder if the costs are actually lower because they don't require the constant restocking throughout the day, extra deliveries, etc. Probably the most extreme example of that theory is Publix. But there really is a point where the profitability no longer scales once a store gets too busy, especially when it's physically too small like many LA Ralphs stores. I think they run much higher payrolls because of the excessive workload. Sell more but make less.
There is absolutely a scale in the grocery business where you can cut expenses and run on low volume and make surprising profit. A number of independent stores operate under this model. They aren't necessarily pleasant- there is no nice bakery, no nice deli- those all cost money. Center store mix is carefully curated to reduce spoilage and items may be missing that people expect but then oddball hard to find items are there that the local customers buy. But there is still a store...
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Re: 🛒 Kroger-Albertsons Merger: National Impact
They came out with that PR in response to Biden getting up and telling grocery stores to "cut their prices" in some speech in recent weeks and then his comments about products being downsized (whoever did the speech writing for him is completely clueless on timing- the ice creams mostly downsized from 1.75 quart to 1.5 quart years ago) but prices not being decreased during the Super Bowl. When I heard him say those things I almost wondered if it was deliberate and the speech writers hit these topics on purpose to give Albertsons some PR move to help push along this merger by saying look at this we are doing this merger with Kroger so prices can be cut so we can follow these orders from the President of the US.CalItalian wrote: ↑February 13th, 2024, 11:27 am Kroger really grasping at straws coming out with this pr today. Adding nothing they haven't already said.
Everyone in DC already knows the FTC is going to sue to block. Joined by multiple states.
Kroger to Lower Prices Following Merger with Albertsons Cos
https://www.prnewswire.com/news-release ... 59961.html
Legally Kroger has a lot of evidence they can provide to show they did in fact do major price decreases when they took over Pick N Save/Mariano's. I was watching their ads when they started that and they absolutely did a major price cut program. I'm not sure about Harris Teeter but I think they may have some stuff from that merger too. It is going to take an argument of the FTC to say listen you can do major price cuts at 100 stores of your at the time 2,500 stores or whatever and it won't be a big hit to your company, but to say you will price cut in the 1,500 Albertsons units you keep can you really afford to do such major price cuts in such a high percentage of your stores? Or something. All my opinion.
What I actually see happening at Smiths is price increase after price increase... I feel like they are trying to move up to Safeway style pricing before the merger closes. They are still lower on a lot of items but more and more items are coming up; brand name center store items specifically. I am seeing a lot of price escalation at Wal Mart too but the price gap seems to be widening on many items.
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Re: 🛒 Kroger-Albertsons Merger: National Impact
Now it’s Colorado’s turn for a lawsuit.
https://www.9news.com/amp/article/money ... c05d65af7f
This is another market where the merger will have significant impact- there are rural mountain towns where Safeway and King Soopers/City Market are the only stores. Albertsons/Safeway and Kroger (King Soopers/City Market) are the only traditional grocers in the state.
https://www.9news.com/amp/article/money ... c05d65af7f
This is another market where the merger will have significant impact- there are rural mountain towns where Safeway and King Soopers/City Market are the only stores. Albertsons/Safeway and Kroger (King Soopers/City Market) are the only traditional grocers in the state.
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Re: 🛒 Kroger-Albertsons Merger: National Impact
Colorado is a big problem. The stores that will be divested, too many are marginal volume stores at best. Also nothing got divested in the Albertsons Safeway merger so they already have kept/closed outright some stores that should have been divested back then.retailfanmitchell019 wrote: ↑February 14th, 2024, 12:19 pm Now it’s Colorado’s turn for a lawsuit.
https://www.9news.com/amp/article/money ... c05d65af7f
This is another market where the merger will have significant impact- there are rural mountain towns where Safeway and King Soopers/City Market are the only stores. Albertsons/Safeway and Kroger (King Soopers/City Market) are the only traditional grocers in the state.
WA I think a lot of what will be divested is fairly solid performing stores. Which should attract higher efforts from the buyer of divested stores.
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Re: 🛒 Kroger-Albertsons Merger: National Impact
The fact is that they are, and will always be, beholden to Wall Street.storewanderer wrote: ↑February 14th, 2024, 1:23 amThey came out with that PR in response to Biden getting up and telling grocery stores to "cut their prices" in some speech in recent weeks and then his comments about products being downsized (whoever did the speech writing for him is completely clueless on timing- the ice creams mostly downsized from 1.75 quart to 1.5 quart years ago) but prices not being decreased during the Super Bowl. When I heard him say those things I almost wondered if it was deliberate and the speech writers hit these topics on purpose to give Albertsons some PR move to help push along this merger by saying look at this we are doing this merger with Kroger so prices can be cut so we can follow these orders from the President of the US.CalItalian wrote: ↑February 13th, 2024, 11:27 am Kroger really grasping at straws coming out with this pr today. Adding nothing they haven't already said.
Everyone in DC already knows the FTC is going to sue to block. Joined by multiple states.
Kroger to Lower Prices Following Merger with Albertsons Cos
https://www.prnewswire.com/news-release ... 59961.html
Legally Kroger has a lot of evidence they can provide to show they did in fact do major price decreases when they took over Pick N Save/Mariano's. I was watching their ads when they started that and they absolutely did a major price cut program. I'm not sure about Harris Teeter but I think they may have some stuff from that merger too. It is going to take an argument of the FTC to say listen you can do major price cuts at 100 stores of your at the time 2,500 stores or whatever and it won't be a big hit to your company, but to say you will price cut in the 1,500 Albertsons units you keep can you really afford to do such major price cuts in such a high percentage of your stores? Or something. All my opinion.
What I actually see happening at Smiths is price increase after price increase... I feel like they are trying to move up to Safeway style pricing before the merger closes. They are still lower on a lot of items but more and more items are coming up; brand name center store items specifically. I am seeing a lot of price escalation at Wal Mart too but the price gap seems to be widening on many items.
Wall Street expects positive comp sales come hell or high water.
There is no good reason for the massive price increases that have been landing at Albertsons and Kroger stores the last 45 days other than they are cycling the massive price increases that happened at the same time last year. They need to be up to last year not just at Kroger and Albertsons but in all retailers, or they risk everything from Wall Street attacks to losing their credit lines.
They are not going to lower prices, because if they do the Wall Street fat cats will sign the death warrant for the CEO.
The system is stacked against lower prices. If they bring in $100M of price cuts they will be alongside $500M of offsetting increases.
The inflation problem will not stop until Wall Street stops putting all this pressure on these retailers to deliver comp sales.