Albertsons closing MD Safeway distribution center

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TW-Upstate NY
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Re: Albertsons closing MD Safeway distribution center

Post by TW-Upstate NY »

Or could the reason simply be that these companies have concluded that they can make more money off the real estate than they could possibly make selling groceries? It's been mentioned here many times that a lot of this has been held for years which means it's bought and paid for many times over. And then take into consideration operating costs, maintaining the buildings and paying people to staff it and sometimes it just makes more sense to just sell it and close the location and take the proceeds where you can get a better return.
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Re: Albertsons closing MD Safeway distribution center

Post by pseudo3d »

TW-Upstate NY wrote: February 3rd, 2020, 9:41 am Or could the reason simply be that these companies have concluded that they can make more money off the real estate than they could possibly make selling groceries? It's been mentioned here many times that a lot of this has been held for years which means it's bought and paid for many times over. And then take into consideration operating costs, maintaining the buildings and paying people to staff it and sometimes it just makes more sense to just sell it and close the location and take the proceeds where you can get a better return.
First, remember C&S, which had operated the center until a few years ago, wanted it closed and replaced their PA facilities anyway.

Secondly, due to the Albertsons merger, the whole ecosystem in which Safeway Eastern was operating changed. In the late 1990s when the Upper Marlboro distribution center was built, Safeway Eastern was a 130-store division located far away from any other division (closest being Dominick's, which was purchased the same year the DC was built). The Eastern (Washington DC) Division was created as the Sanitary Grocery purchase in the late 1920s but was isolated from every other division, not contiguous with the short-lived New York division, and even in the 1970s heyday, Safeway didn't go much past the Mississippi.

That all changed in 2015. Suddenly, Safeway Eastern found itself in a market adjacent to ACME (and its new A&P stores that would follow within a year of the merger), some of the stores they were very close by, and then Shaw's and Star Market to Boston and up toward Canada, and ACME had a massive distribution center (also in PA) that could take in more volume.
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Re: Albertsons closing MD Safeway distribution center

Post by Bagels »

TW-Upstate NY wrote: February 3rd, 2020, 9:41 am Or could the reason simply be that these companies have concluded that they can make more money off the real estate than they could possibly make selling groceries? It's been mentioned here many times that a lot of this has been held for years which means it's bought and paid for many times over. And then take into consideration operating costs, maintaining the buildings and paying people to staff it and sometimes it just makes more sense to just sell it and close the location and take the proceeds where you can get a better return.
Safeway was selling real estate (including select stores) to generate cash to pass onto its shareholders. Albertsons is at least re-investing the money back into the company. Of course, the value of the real estate will play into their future decisions, just as other companies are doing. As pseudo3d notes, this DC became expendable in the integrated Company.
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