🛒 Kroger-Albertsons Merger: National Impact

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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by veteran+ »

ClownLoach wrote: February 29th, 2024, 4:56 pm
pseudo3d wrote: February 29th, 2024, 12:04 pm https://www.supermarketnews.com/retail- ... omplicated

This article has another look by an analyst. A few things to note:

- Has Kroger revealed a counter-claim? I can't see anything where Rodney has vowed to continue to fight.
- Nobody has talked about how the grocery quality is affected. A lot of the perishable quality at Albertsons/Safeway has slipped, not just in the past few years but also since the original Albertsons/Safeway merger. A Kroger merger would mean that it would go even further (even worse for the divested stores).
- If C&S was what they really wanted, the extra ~200 stores they had as a contingency plan (C&S would get first dibs) would be officially revealed. It reveals someone's got cold feet about that. Either Kroger/Albertsons isn't selling or C&S isn't buying.
- The article mentions "Specifically, [FTC] does not like the divestiture involving C&S Wholesale Grocers because C&S is not well capitalized" which means C&S can't afford the extra ~200 stores without risking serious financial danger.
- There's a point in there that even divested stores really can't go to other competitors, which is true. In every single grocery market, there has already been mass consolidation. You can't divide stores between 3-4 other competitors anymore.
All exceptionally valid points.

Last night I was at an Albertsons and the cashier and bagger were talking through the transaction, complaining about current working conditions. It sounds like Albertsons, despite being union here, is adopting some of the worst recommendations that Apollo brings to their subsidiaries. They are now giving part time employees 3 hour shifts... Just a few hours to work prime time grocery business in the late afternoon. Apollo forced these money saving scheduling practices on other retailers they've acquired or invested in previously (as seen on numerous Reddit and other employee groups). I cannot believe the unions are allowing work shifts that are less than 4 hours. I think this further validates that Apollo is now involved directly in managing Albertsons and will be employing more of their "extracting value" moves in an effort to improve earnings and test to see if their practices work. If so I suspect they will acquire all the remaining shares they don't own and take it private, ending this Kroger deal.

It is my understanding that you do have to file a counter-claim and sue the FTC and Justice Dept., not just file an appeal to overturn these kinds of actions. If Kroger was indeed serious about fighting this to the bitter end then they would have already had their case filed as all that would require editing would be the first page. The rest would be their early arguments as to why they should be allowed to merge, which we have clearly seen before. So I do think they're stuck because they can't divest the stores to reliable buyers due to the excessive consolidation of the industry. C&S blabbing made themselves into a giant question mark and as such their credibility is shot, regardless of their balance sheet strengths or weaknesses.

As far as quality of perishables goes, I have found the opposite locally. Ralphs quality has plummeted in meats, produce, deli and bakery. Albertsons is absolutely better all around in these categories, except for the fact that their prices on meats are outrageously high and they don't offer Boars Head Brand (except at Pavilions). Ralphs is like grocery outlet, overly ripe fruits that are going to rot in a couple of days, bad looking greens, and bagged salads and such that are clearly not handled properly because they are going bad in the bag before the sell through date. I have to get produce at Albertsons, Sprouts or Stater Bros if I expect it to last any reasonable amount of time. I do not believe Ralphs is cutting meats in store either, they seem to have the same kind of shelf ready packaging as Walmart where it looks like a local shrink wrapper machine sealed and labeled it but it's really coming out of a box. Many of the meats are poorly trimmed and impossibly uniform indicating robotic cutting. They also seem to be using data mining technologies to reduce shrink by having very little stock available, sometimes just two or three packages of a common cut like New York or Ribeye and cases that are all a single layer to improve date rotation at the expense of selection. The quality of all perishables at Ralphs is bad, bad, bad and getting worse.
Totally agree with the Ralphs "fresh" categories. In fact they have had some expiration issues that was covered in the press.

The Ralphs Fresh Fare 🤢🤮 in West Hollywood was caught selling frozen pizza that was 3 years old.
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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by veteran+ »

ClownLoach wrote: March 1st, 2024, 4:03 am
storewanderer wrote: February 29th, 2024, 7:15 pm
ClownLoach wrote: February 29th, 2024, 4:56 pm

All exceptionally valid points.

Last night I was at an Albertsons and the cashier and bagger were talking through the transaction, complaining about current working conditions. It sounds like Albertsons, despite being union here, is adopting some of the worst recommendations that Apollo brings to their subsidiaries. They are now giving part time employees 3 hour shifts... Just a few hours to work prime time grocery business in the late afternoon. Apollo forced these money saving scheduling practices on other retailers they've acquired or invested in previously (as seen on numerous Reddit and other employee groups). I cannot believe the unions are allowing work shifts that are less than 4 hours. I think this further validates that Apollo is now involved directly in managing Albertsons and will be employing more of their "extracting value" moves in an effort to improve earnings and test to see if their practices work. If so I suspect they will acquire all the remaining shares they don't own and take it private, ending this Kroger deal.

As far as quality of perishables goes, I have found the opposite locally. Ralphs quality has plummeted in meats, produce, deli and bakery. Albertsons is absolutely better all around in these categories, except for the fact that their prices on meats are outrageously high and they don't offer Boars Head Brand (except at Pavilions). Ralphs is like grocery outlet, overly ripe fruits that are going to rot in a couple of days, bad looking greens, and bagged salads and such that are clearly not handled properly because they are going bad in the bag before the sell through date. I have to get produce at Albertsons, Sprouts or Stater Bros if I expect it to last any reasonable amount of time. I do not believe Ralphs is cutting meats in store either, they seem to have the same kind of shelf ready packaging as Walmart where it looks like a local shrink wrapper machine sealed and labeled it but it's really coming out of a box. Many of the meats are poorly trimmed and impossibly uniform indicating robotic cutting. They also seem to be using data mining technologies to reduce shrink by having very little stock available, sometimes just two or three packages of a common cut like New York or Ribeye and cases that are all a single layer to improve date rotation at the expense of selection. The quality of all perishables at Ralphs is bad, bad, bad and getting worse.
I'm not sure why you'd put up with the terrible meat pricing at Albertsons/Vons or the poor quality/mix at Ralphs though. Why not proceed directly to Stater?

Kroger bakery has been terrible for quite some time.
I don't buy anything meat at Albertsons unless it's on sale. Stater has been inconsistent of late too. If it's full price the quality is fine, but they're getting expensive. Their sale item quality is horrible. It is like they've made a deal for lower quality stuff for advertised sale items. Ungraded beef. It used to be that the sale items were represented in the service case (sometimes a dollar or two more per pound but the case would be "choice" while the rack would be "select") and you could select what you wanted, but that is not the case consistently anymore. For example they ran an ad for tri tip $4.77 a pound. Great, I will buy a couple and cook them on my smoker. Go in and they're untrimmed, or they are so overly trimmed that I don't even recognize the cut and no way I could slow smoke it Santa Maria style. Zero marbling so I know it's going to be chewy as shoe leather. And it's not offered at all at the service counter except for some pre-marinated stuff that isn't on sale and full price Harris Ranch that is way too expensive. Tried the untrimmed and when I was done spending time cutting it down properly and removing the excess fat and such half the meat was gone and all savings negated versus just buying a quality, perfectly trimmed, choice or prime tri tip at Costco or Sam's. I seldom respond to a Stater ad price anymore because I don't know if the quality is going to be good or rotten. It borders on bait and switch these days. Ironically, the only time meat looks any good at Ralphs is when it's on sale, but I normally only go there out of convenience because it's two blocks from my house. It would be nice if they ran a quality store; if price wasn't an issue to me I still wouldn't shop there in it's current state.

So I wind up buying a lot at Sam's and Costco even though that means sometimes there's going to be waste because the package size is too much for my small household. But at least I don't feel like I'm getting ripped off or buying garbage quality. I might not need four or five steaks, but I can vacuum seal and freeze the extras. Ultimately I spend way too much time buying different items from different stores. Albertsons, Stater Bros, Sprouts (if I drive past two of them the third one is fabulous), Trader Joe's, Winco, SuperTarget, Costco and Sam's all see regular visits from me. It's so frustrating that I wind up giving up and eating out far too often.

It is the current state of inconsistency of all of these SoCal grocery store chains especially since COVID that has made me go from not really caring much about the Kroger merger to being an outspoken opponent. One of the arguments Kroger makes for their merger is that the marketplace has changed and consumers now shop multiple stores for their food. I do not believe customers do this because they WANT to, rather because they HAVE to. The reality is that they're forced to do so because of unacceptable or inconsistent quality, pricing, inventory availability, and service/store conditions. The ineptitude of all of these chains especially in SoCal reveals the need for a quality supermarket operator where a consumer can consistently visit the same store and buy all their food without worrying about poor quality, out of stocks, or absurd high/low pricing schemes. We don't have a category killer in foods here, and it is made only more frustrating by seeing that these chains are capable of running better operations elsewhere that could be what we need here.
You are so spot on with:

"So I wind up buying a lot at Sam's and Costco even though that means sometimes there's going to be waste because the package size is too much for my small household. But at least I don't feel like I'm getting ripped off or buying garbage quality. I might not need four or five steaks, but I can vacuum seal and freeze the extras. Ultimately I spend way too much time buying different items from different stores. Albertsons, Stater Bros, Sprouts (if I drive past two of them the third one is fabulous), Trader Joe's, Winco, SuperTarget, Costco and Sam's all see regular visits from me. It's so frustrating that I wind up giving up and eating out far too often.

It is the current state of inconsistency of all of these SoCal grocery store chains especially since COVID that has made me go from not really caring much about the Kroger merger to being an outspoken opponent. One of the arguments Kroger makes for their merger is that the marketplace has changed and consumers now shop multiple stores for their food. I do not believe customers do this because they WANT to, rather because they HAVE to. The reality is that they're forced to do so because of unacceptable or inconsistent quality, pricing, inventory availability, and service/store conditions. The ineptitude of all of these chains especially in SoCal reveals the need for a quality supermarket operator where a consumer can consistently visit the same store and buy all their food without worrying about poor quality, out of stocks, or absurd high/low pricing schemes. We don't have a category killer in foods here, and it is made only more frustrating by seeing that these chains are capable of running better operations elsewhere that could be what we need here."

The above should be published writ large. It is the elephant in the room that no one dares notice because everyone has accepted the putrid status quo as "normal".

I live in a more densely populated area than you and all your observations are even more intense here. There is no way I could shop like that. It would take a whole day.

If I did not have Pavilions (best store in a 5 mile radius of me) and was not able to afford their higher prices I do not know what I would do.

:x :x :x :x
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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by pseudo3d »

So Supermarket News has reported that both Kroger has vacated office space in downtown Cincinnati (despite the fact that they forced workers to go back to the office from WFH) and despite averting a strike in Houston (not that Houston was in any danger of a market exit, and any strike would've just been helpful to H-E-B), it looks like about 40 stores in the Mid-Atlantic Division of Kroger want to strike.

The idea of any market pullouts won't happen, but to keep the unions happy (even in areas that won't be affected by the merger) is a constant issue for Kroger. There's another evidentiary hearing planned for June...Kroger has enough problems before it has to worry another 1000 or so stores added to the payroll. They need to give it up as soon as possible.
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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by storewanderer »

pseudo3d wrote: March 3rd, 2024, 12:02 pm So Supermarket News has reported that both Kroger has vacated office space in downtown Cincinnati (despite the fact that they forced workers to go back to the office from WFH) and despite averting a strike in Houston (not that Houston was in any danger of a market exit, and any strike would've just been helpful to H-E-B), it looks like about 40 stores in the Mid-Atlantic Division of Kroger want to strike.

The idea of any market pullouts won't happen, but to keep the unions happy (even in areas that won't be affected by the merger) is a constant issue for Kroger. There's another evidentiary hearing planned for June...Kroger has enough problems before it has to worry another 1000 or so stores added to the payroll. They need to give it up as soon as possible.
It says they moved the Downtown "digital" workers to some other facility in Blue Ash at 11450 Grooms Road which is about 19 miles from Downtown. Looking at Grooms Road, I am sure it is a lot cheaper to operate...

Kroger has had strike threats in Portland, Denver, Houston... then the union caved in and let Kroger have what it wanted every time. I am sure this will happen again in WV, KY, OH.
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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by pseudo3d »

storewanderer wrote: March 3rd, 2024, 10:18 pm
pseudo3d wrote: March 3rd, 2024, 12:02 pm So Supermarket News has reported that both Kroger has vacated office space in downtown Cincinnati (despite the fact that they forced workers to go back to the office from WFH) and despite averting a strike in Houston (not that Houston was in any danger of a market exit, and any strike would've just been helpful to H-E-B), it looks like about 40 stores in the Mid-Atlantic Division of Kroger want to strike.

The idea of any market pullouts won't happen, but to keep the unions happy (even in areas that won't be affected by the merger) is a constant issue for Kroger. There's another evidentiary hearing planned for June...Kroger has enough problems before it has to worry another 1000 or so stores added to the payroll. They need to give it up as soon as possible.
Kroger has had strike threats in Portland, Denver, Houston... then the union caved in and let Kroger have what it wanted every time. I am sure this will happen again in WV, KY, OH.
All that requires money to negotiate and money to pay off the right people...why deal with more of the same? I'm sure if Kroger could take the opportunity to become non-union without the massive lawsuits and payouts that would result from such a thing, it would...and the merger could provide the chaos they need to accomplish it.

On the merger itself, another article brings up another point.
The potential for C&S to become a retail player in several markets around the country is also a concern to some retailers, including Lauren G.D. Redman, president and CEO of Rudy’s Markets, which operates the Newport Avenue Market and Oliver Lemon’s stores in Bend, Oregon.

“My concern lies in the potential that one of our wholesalers [C&S] becomes a retailer in our area with the purchase of divested stores,” Redman told SFA News Daily. “Given the difficulty all independent retailers face around procurement, shipments, and the like, one has to guess their stores would be a priority over delivery to ours.”
We know that from the past, Fleming's deal with Kmart was unsustainable and actually ended up screwing over the independents Fleming served when it came to procurement. The 413 stores would put a strain on C&S that would probably cause them to prioritize the acquired stores, but if this harms independents, it would put an even greater strain on the prospects of existing C&S independents scooping up stores (or creating new ones in the West Coast).
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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by ClownLoach »

The JetBlue-Spirit merger is officially dead as of today, after the FTC and Justice Dept said they would block it.

Both companies had filed all possible appeals and attempts to fight the injunction.

So far we have seen zero sign of Kroger or Albertsons taking any official action to rescue their merger. I do wonder if they were waiting to see the outcome of this seemingly unrelated JetBlue-Spirit deal.

I wonder if we see this deal called off by the end of the week...
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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by marketreportblog »

ClownLoach wrote: March 4th, 2024, 3:55 pm I wonder if we see this deal called off by the end of the week...
Ready for a crazy conspiracy theory?

Kroger-Albertsons merger is called off. We go back to Plan A and one of them acquires or merges with Ahold Delhaize's US division.

Now hear me out.

It's obvious that Stop & Shop is struggling, and while it looks like the other banners seem to be doing really well, I see signs that the company overall is struggling. We have the closure of home-delivery fulfillment warehouses in NJ and throughout Giant-MD, some as new as just three months old. They've sold Fresh Direct, and most recently, they've sold two meat-processing plants to Cargill. Is that what a company that has long-term intentions of doing business here in the US would do? It feels suspiciously like Ahold Delhaize is winding down here in the US.

Okay, I don't really believe that there will be some shocking twist with Kroger-Ahold Delhaize or Albertsons-Ahold Delhaize becoming the next big thing. But weirder things have happened.

More seriously, yes, I suspect that Kroger and Albertsons are all bark and no bite on their promise to litigate the merger to its end. I think it's likely they give up in the near future, but it's also very possible they don't -- and if they continue to fight the FTC, there's a solid chance they actually win.
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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by HCal »

marketreportblog wrote: March 4th, 2024, 5:20 pm
It's obvious that Stop & Shop is struggling, and while it looks like the other banners seem to be doing really well, I see signs that the company overall is struggling. We have the closure of home-delivery fulfillment warehouses in NJ and throughout Giant-MD, some as new as just three months old. They've sold Fresh Direct, and most recently, they've sold two meat-processing plants to Cargill. Is that what a company that has long-term intentions of doing business here in the US would do? It feels suspiciously like Ahold Delhaize is winding down here in the US.
Companies often divest non-core assets in order to focus on their main business. If Ahold Delhaize had been closing stores or selling retail divisions I would be worried, but selling other stuff is perfectly fine IMO.
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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by ClownLoach »

marketreportblog wrote: March 4th, 2024, 5:20 pm
ClownLoach wrote: March 4th, 2024, 3:55 pm I wonder if we see this deal called off by the end of the week...
Ready for a crazy conspiracy theory?

Kroger-Albertsons merger is called off. We go back to Plan A and one of them acquires or merges with Ahold Delhaize's US division.

Now hear me out.

It's obvious that Stop & Shop is struggling, and while it looks like the other banners seem to be doing really well, I see signs that the company overall is struggling. We have the closure of home-delivery fulfillment warehouses in NJ and throughout Giant-MD, some as new as just three months old. They've sold Fresh Direct, and most recently, they've sold two meat-processing plants to Cargill. Is that what a company that has long-term intentions of doing business here in the US would do? It feels suspiciously like Ahold Delhaize is winding down here in the US.

Okay, I don't really believe that there will be some shocking twist with Kroger-Ahold Delhaize or Albertsons-Ahold Delhaize becoming the next big thing. But weirder things have happened.

More seriously, yes, I suspect that Kroger and Albertsons are all bark and no bite on their promise to litigate the merger to its end. I think it's likely they give up in the near future, but it's also very possible they don't -- and if they continue to fight the FTC, there's a solid chance they actually win.
I wouldn't call it a conspiracy theory. It makes a lot of sense for a deal with Ahold Delhaize for either company. Less overlaps. I think it would be more likely a private equity fueled process where Albertsons and Ahold Delhaize wind up together but this time Albertsons is in control (and funded by stakeholder Apollo). Preciously it was thought Ahold would pursue Albertsons, but I think it will be the opposite now.
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Re: 🛒 Kroger-Albertsons Merger: National Impact

Post by pseudo3d »

marketreportblog wrote: March 4th, 2024, 5:20 pm
ClownLoach wrote: March 4th, 2024, 3:55 pm I wonder if we see this deal called off by the end of the week...
Ready for a crazy conspiracy theory?

Kroger-Albertsons merger is called off. We go back to Plan A and one of them acquires or merges with Ahold Delhaize's US division.

Now hear me out.

It's obvious that Stop & Shop is struggling, and while it looks like the other banners seem to be doing really well, I see signs that the company overall is struggling. We have the closure of home-delivery fulfillment warehouses in NJ and throughout Giant-MD, some as new as just three months old. They've sold Fresh Direct, and most recently, they've sold two meat-processing plants to Cargill. Is that what a company that has long-term intentions of doing business here in the US would do? It feels suspiciously like Ahold Delhaize is winding down here in the US.

Okay, I don't really believe that there will be some shocking twist with Kroger-Ahold Delhaize or Albertsons-Ahold Delhaize becoming the next big thing. But weirder things have happened.

More seriously, yes, I suspect that Kroger and Albertsons are all bark and no bite on their promise to litigate the merger to its end. I think it's likely they give up in the near future, but it's also very possible they don't -- and if they continue to fight the FTC, there's a solid chance they actually win.
One thing I've noticed about Ahold Delhaize is unlike Albertsons or Kroger, which run one company supplied through a variety of divisions, Ahold Delhaize seems to operate as several collected companies that operate with no-compete agreements and some shared operations but still much more independent than Kroger or Albertsons divisions are. Food Lion is still very different than Giant, and they have TWO supermarket chains that are both named Giant.

I don't think Kroger and Albertsons will continue to drag out the fight, it's just more litigation, more compromises, more money spent.

While Stop & Shop's decline is something to notice, I don't think that meat processing or fulfillment center closures are a thing to worry about. Kroger, for instance, has benefitted from the merger to distract from other issues like the Ocado thing losing steam again (Austin's delivery center quietly closed). And meat processing is unusual for a grocery store to do. (Is it true that most Ahold Delhaize stores don't have meat counters and just pre-pack everything like Walmart does?)

For a while I was thinking that pre-merger Royal Ahold was the last frontier for Kroger to move into and buy, but since the merger it would present a difficulty for both chains. Food Lion is heavily in Kroger territory but most of its stores are quite small (almost all under 50,000 square feet) and not really "full line" like Kroger or Albertsons stores are. I imagine that in an Ahold Delhaize merger situation, those stores get spun off (they are, after all, a 1000+ store chain, not an easy feat). The other chains would pose a difficulty for Albertsons, as Giant-MD dominates the Philadelphia/Baltimore/Washington DC markets where ACME and Safeway play second banana, Hannaford overlaps with Shaw's/Star Market, and of course Stop & Shop stretches along the East Coast.

Either way, excepting Food Lion, the whole of Ahold Delhaize's operations are more easy for Kroger to swoop in and take over. Albertsons would be far more complicated. Frankly, I'm not even sure if it's a good deal to "trade up" to Giant. American Stores spun off Alpha Beta to buy Lucky, but the whole ordeal with the courts damaged the company severely and we'll never know what the long range plan for American Stores because it was less than a decade between settling with John Van de Kamp and accepting Albertsons' $11.7 billion buyout, and during that time they purged themselves a lot of their underperforming and non-core assets.

Until Ahold Delhaize does something with its divisions—spins off Food Lion or puts Stop & Shop on the sales block, I think it's too early to link Ahold Delhaize with Albertsons or Kroger.
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