🛒 Kroger-Albertsons Merger: National Impact

[pseudo3d]

Meanwhile one could make the argument that Kroger's continued growth of large marketplace stores is really a invasion of Target and Walmart's segments. That does add complexity because the feds don't view things that way. So the feds just see conventional supermarket industry players and share, then decide that in that segment Kroger and Albertsons combined would have too much share.

Kroger and their Marketplace stores haven't really had a lot of activity in the last five years. Anecdotally, they didn't move a lot of general merchandise, and the continued shift in Fred Meyer to be more grocery-focused doesn't bode well for Kroger Marketplace.

[ClownLoach]

Meanwhile one could make the argument that Kroger's continued growth of large marketplace stores is really a invasion of Target and Walmart's segments. That does add complexity because the feds don't view things that way. So the feds just see conventional supermarket industry players and share, then decide that in that segment Kroger and Albertsons combined would have too much share.

Kroger and their Marketplace stores haven't really had a lot of activity in the last five years. Anecdotally, they didn't move a lot of general merchandise, and the continued shift in Fred Meyer to be more grocery-focused doesn't bode well for Kroger Marketplace.

They're still building them though, for example the new large format marketplace in Henderson, NV. And they're investing a lot more in remodeling of Fred Meyer formats based on what I've seen versus say grocery focused chains like Ralphs that don't even get paint or new decor in most cases (or get new decor that is abhorrent like the infamous brown cardboard cutout letters in some of the new Fresh Fare stores). Although I do recognize that some of the general merchandise at Fred Meyer is being cut back as part of the remodels, some of those categories like home paint and hardware have been dominated by Home Depot/Lowe's and likely shrink more than they sell.

[pseudo3d]

FTC takes its first L in the case. Not sure how this is going to affect anything.

https://news.bloomberglaw.com/antitrust ... -challenge

[ClownLoach]

FTC takes its first L in the case. Not sure how this is going to affect anything.

https://news.bloomberglaw.com/antitrust ... -challenge

A motion denied without prejudice is not a loss, it's just a procedural error. They can make the same motion after the appropriate date and it will be granted. Really a big nothing here, but since things have been so quiet I think they're going to report on trivial matters like this until the wheels are turning again.

[storewanderer]

Meanwhile one could make the argument that Kroger's continued growth of large marketplace stores is really a invasion of Target and Walmart's segments. That does add complexity because the feds don't view things that way. So the feds just see conventional supermarket industry players and share, then decide that in that segment Kroger and Albertsons combined would have too much share.

Kroger and their Marketplace stores haven't really had a lot of activity in the last five years. Anecdotally, they didn't move a lot of general merchandise, and the continued shift in Fred Meyer to be more grocery-focused doesn't bode well for Kroger Marketplace.

They're still building them though, for example the new large format marketplace in Henderson, NV. And they're investing a lot more in remodeling of Fred Meyer formats based on what I've seen versus say grocery focused chains like Ralphs that don't even get paint or new decor in most cases (or get new decor that is abhorrent like the infamous brown cardboard cutout letters in some of the new Fresh Fare stores). Although I do recognize that some of the general merchandise at Fred Meyer is being cut back as part of the remodels, some of those categories like home paint and hardware have been dominated by Home Depot/Lowe's and likely shrink more than they sell.

The quality of remodel for Kroger varies based upon the profitability of the individual store. Kroger has a timeline that it expects the store to "pay" for its remodel. They will do whatever work they think the store can "afford to pay for" based on its future performance.

If a store has a big sales spike after a remodel they will go in and do random additional work that they may have wanted to do during the remodel, but didn't, due to budget constraints.

Where this gets really bad is with a remodel that has a ton of deferred maintenance on a store that isn't terribly profitable but they own the building, it is 30 years old, and they haven't spent much money on it ever. The store just doesn't get the remodel it needs, they already spend more than they wanted to (to fix infrastructure and other non-customer facing issues), etc.

I have not, for quite some time, seen Kroger "remodel" a store then close it. If they didn't learn their lesson on that with Ralphs NorCal... which I think they did... also some similar failures out at Dillons in the early 2000's but nothing on the scale of the money burn of Ralphs NorCal remodeling program... Unlike Safeway who has this weird thing where they throw remodels at poorly performing stores then close them (even in NorCal- with that Madera Pak N Save and the Fisherman's Wharf Safeway which both got the cheap Florida remodels then closed like a year later), I have not seen Kroger do that in a while. The last example of seeing Kroger close a recently remodeled store was when they sold a Ralphs somewhere in the San Gabriel Valley area to 99 Ranch and it had the 2010 era Kroger interior with cement floors and what was a rather thorough remodel.

[retailfanmitchell019]

Olympia (shorthand for WA government) is paying law firm Munger to fight the Kroger-Albertsons merger: https://www.reuters.com/legal/governmen ... 024-06-03/

Not much merger news apart from this in the past couple weeks- Kroger might as well unconditionally surrender to the Feds early because this merger is pretty much toast.

[pseudo3d]

Kroger and their Marketplace stores haven't really had a lot of activity in the last five years. Anecdotally, they didn't move a lot of general merchandise, and the continued shift in Fred Meyer to be more grocery-focused doesn't bode well for Kroger Marketplace.

They're still building them though, for example the new large format marketplace in Henderson, NV. And they're investing a lot more in remodeling of Fred Meyer formats based on what I've seen versus say grocery focused chains like Ralphs that don't even get paint or new decor in most cases (or get new decor that is abhorrent like the infamous brown cardboard cutout letters in some of the new Fresh Fare stores). Although I do recognize that some of the general merchandise at Fred Meyer is being cut back as part of the remodels, some of those categories like home paint and hardware have been dominated by Home Depot/Lowe's and likely shrink more than they sell.

The quality of remodel for Kroger varies based upon the profitability of the individual store. Kroger has a timeline that it expects the store to "pay" for its remodel. They will do whatever work they think the store can "afford to pay for" based on its future performance.

If a store has a big sales spike after a remodel they will go in and do random additional work that they may have wanted to do during the remodel, but didn't, due to budget constraints.

Where this gets really bad is with a remodel that has a ton of deferred maintenance on a store that isn't terribly profitable but they own the building, it is 30 years old, and they haven't spent much money on it ever. The store just doesn't get the remodel it needs, they already spend more than they wanted to (to fix infrastructure and other non-customer facing issues), etc.

I have not, for quite some time, seen Kroger "remodel" a store then close it. If they didn't learn their lesson on that with Ralphs NorCal... which I think they did... also some similar failures out at Dillons in the early 2000's but nothing on the scale of the money burn of Ralphs NorCal remodeling program... Unlike Safeway who has this weird thing where they throw remodels at poorly performing stores then close them (even in NorCal- with that Madera Pak N Save and the Fisherman's Wharf Safeway which both got the cheap Florida remodels then closed like a year later), I have not seen Kroger do that in a while. The last example of seeing Kroger close a recently remodeled store was when they sold a Ralphs somewhere in the San Gabriel Valley area to 99 Ranch and it had the 2010 era Kroger interior with cement floors and what was a rather thorough remodel.

I still remember how badly Kroger botched the remodel of an older Greenhouse store I grew up with. It left some uneven tiles and other junk leftover, and still managed to limp along for another 15 years before closing.

I did discover some evidence later on that perhaps the remodel was supposed to be a bit more extensive, so maybe that's what happened. Despite besting a Winn-Dixie opening catty-corner (it closed in the mid-1990s; though it didn't leave the area until 2002), it wasn't a super-busy store before and by 2000 its glory days were behind it.

[storewanderer]

Olympia (shorthand for WA government) is paying law firm Munger to fight the Kroger-Albertsons merger: https://www.reuters.com/legal/governmen ... 024-06-03/

Not much merger news apart from this in the past couple weeks- Kroger might as well unconditionally surrender to the Feds early because this merger is pretty much toast.

CA doesn't seem to be doing anything. I think Kroger is getting close/tight with CA politicians in hopes it will help them support the merger.

I don't think the merger is toast. Backstage things are in motion from a planning standpoint as if the merger is proceeding. They have to act like they are going to move forward in good faith until they officially call it off.

In my opinion they already should have called it off, waive the break up fees, and move on. But I don't think it will get called off that smoothly.

[ClownLoach]

Although this article is from Denver, it has some interesting legal discussion that is relevant nationally. Sounds like Kroger and Albertsons are trying to fight the state lawsuits saying that only the feds should have jurisdiction. Thankfully, the states do have the right to fight antitrust cases along with the feds, and the feds are standing up for the states now. This is a major development since allegedly the Justice Dept/FTC were angry when Washington and other states chose to sue to block the deal on their own, now they're all working together. That does not bode well for the merger at all.

There is also a very odd discussion that makes it sound like C&S would be operating the acquired Safeway stores in a manner that is "the same" as where they're operated by Kroger. That the customer would not see any difference between a C&S operated Safeway and a Kroger operated Safeway. There is a lot to read into that... Does that mean that in a way Kroger is not exactly going to relinquish independent control of the stores? Are they in effect by licensing the Safeway brand requiring C&S to adhere to the ads published by Safeway, their policies, their pricing, their merchandising, their club card, etc. as if they are a franchisee? Is Kroger going to make both their own brand and Signature, then sell Signature merchandise to the C&S owned Safeway stores? Are the Safeway/Albertsons loyalty club cards going to remain separate of Kroger clubs? Is this further validation that Kroger intends to maintain completely different formats and will not change say Vons and Albertsons to a Ralphs format if they somehow were able to get the merger to go through? Is the intention to create the appearance these chains haven't actually merged (as has been simulated with the Albertsons, Vons, and Pavilions brands in SoCal)?

This is a huge window into the possible operating policies.

https://www.google.com/amp/s/denvergaze ... f.amp.html

[Romr123]

That is an odd story, with the misspelling of Haggen calling into question some of the astute description and specifics on operating plans.