Kroger to merge with Albertsons?

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Re: Kroger to merge with Albertsons?

Post by Bagels »

storewanderer wrote: March 19th, 2023, 1:17 pm
veteran+ wrote: March 19th, 2023, 8:00 am Yep, you are both spot on about Publix.

Their ideology and hubris will never allow them to get involved in a Union environment or be bought out. The DNA of this company is JENKINS (related or not) and it will remain so.

They are not innovators, plus it is the Publix way or get lost.

IMO, their cult like success is about historical "luck" and a PR and Ad campaign that has hypnotized their customers (whom do not have significant choices) and "the industry" that they are the utopia of supermarkets.
Well, the customers did have choices... the choices mostly went out of business as Publix outperformed them in Florida.

What I find more interesting about Publix is their organic expansion outside Florida. In the modern times the only other chain that has had such a successful long running organic expansion program covering so many states/territories in the grocery business is Wal Mart. Wherever Publix expands, customers seem to view them as the "superior" option. Look at Atlanta as a good example. People saw Kroger as some kind of a low end operator and people there seem to just love Publix. In Nashville my observation was Publix wasn't doing great (Kroger always busier if nearby) but anyone you ask about Publix has a positive opinion of them.

Where I think Publix excels is in basics of Grocery 101. The stores are generally clean, orderly, well stocked, and well staffed. The stores do not feel run down. Perimeters are staffed/open when the store is open (which isn't very late). Publix strikes me as quite dependable. Service is interesting- great outside FL, awful in Miami (seems to be a Miami thing), and varying from marginal to okay in other parts of FL. My other observation is Publix allocates proper staffing dollars to its stores to have adequate staffing levels for the volume they do. They also seem to have a very tight grip on shrink (part of why I think their meat and produce areas are not good- they hardly put any product out in so many of their stores and pricing is high).
As you know, Harris Teeter was a small but fast growing chain. Kroger acquired the chain after a bidding war and put the brakes on its rapid growth... because outside of its core markets, it wasn't profitable.

Yes, collectively Publix stores are the nicest of any significant (large) chain. Yes, Publix has the best deli and bakery (of any large chain). Yes, its produce, meat/ seafood is among the best. Yes, nearly everybody who's been in Publix is "wow'd" by it. Yes, Publix won the Florida grocery stores wars, with numerous large operators attempting to build out specific regions in the 1990s but all dropping out. Two big reasons for this -- the biggest being that they looked for the highest volume stores in a given area by a competitor and built a new, better store nearby. The other is demographics -- in the 90s and into the 00s, much of Florida was largely poor/lower middle class OR upper middle class/rich... it was among Walmart's first buildouts and they captured the first group, whereas the second wanted something better.

In Atlanta, Publix overtook Kroger in market share in 2010, but Kroger came out on top just a year or two later and hasn't looked back since. Despite Atlanta ranking in the top 5 in high paying jobs added over the past decade. Nashville's also in that top 5, and Publix hasn't made much inroads there basically since it entered the market 20 years ago. People love Publix, but most think it's too expensive to shop there.
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Re: Kroger to merge with Albertsons?

Post by ClownLoach »

Another speculation I thought about - Target. Every time Target opened a store in conjunction with Albertsons in the same center they agreed to lease restrictions. Target is limited to only 300' of refrigeration and less than 10% of the sales floor may be food items. (My wife worked in one of these restricted stores) Apparently there are quite a few of these stores where the Albertsons next door hasn't changed hands. If Kroger-Albertsons put any of these up for sale in the divest strategy I would imagine Target would immediately offer to buy out the Albertsons so they could rid themselves of the restriction. Apparently it does transfer with ownership change; the Aliso Viejo store divested to Stater Bros in the Lucky merger and they have maintained the restrictions against the very busy Target next door. This of course would give the politicians and unions something to complain about as the only intent Target could have would be to close the store; it is doubtful they would be interested in acquiring then subleasing to another grocer minus the limited food lease restriction or operating both sites.
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Re: Kroger to merge with Albertsons?

Post by storewanderer »

Publix pricing doesn't strike me as overly out of line (their everyday pricing is much lower than Safeway) but where they seem to lack is when it comes to sale prices specifically in fresh departments- they do few sales and the sales they run are lousy. They are better on center store sales, more along the lines of what I am used to. Their pricing strategy is different than the grocery pricing strategy I am used to on the west coast (mix of high/low and promotional everyday low price models applied throughout the store). The other thing with this pricing strategy Publix employs is it makes for "consistent" perimeter department operations from week to week. There is no .88/lb sale on 6 pound+ packs of pork sirloin chops that you know hardly anyone buys that you fill a bunker with 20 packs of on Wednesday (since corporate says you have to fill it up for the sale) and then spoil out on Sunday because only a couple customers bought them. There is no Friday $2.50/lb 6lb+ 80/20 Ground Beef sale where you fill the bunker with 20 packages again because that is what corporate says to do to make it "grand opening look daily," only 4 or 5 people buy, and then you have gray packages of ground beef that you throw out for good on Monday. And yes you have to send pictures to the district merchandising person who passes them to their division counterpart to prove the store actually filled the cases per their instructions. There is no week of $5 8pc Fried Chicken where suddenly chicken sales are triple the usual amount, or week of $5 labor intensive bakery item sale, or "one day sale" where bakery has to mass produce hundreds of packages of cookies or cake slices that only 20% of will sell and the other 80% will be moved around 4 times until they expire then get thrown out. Kroger has been trying to move toward this type of model on bakery/deli pricing (not on meat/produce) with mixed results.
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Re: Kroger to merge with Albertsons?

Post by storewanderer »

ClownLoach wrote: March 19th, 2023, 6:30 pm Another speculation I thought about - Target. Every time Target opened a store in conjunction with Albertsons in the same center they agreed to lease restrictions. Target is limited to only 300' of refrigeration and less than 10% of the sales floor may be food items. (My wife worked in one of these restricted stores) Apparently there are quite a few of these stores where the Albertsons next door hasn't changed hands. If Kroger-Albertsons put any of these up for sale in the divest strategy I would imagine Target would immediately offer to buy out the Albertsons so they could rid themselves of the restriction. Apparently it does transfer with ownership change; the Aliso Viejo store divested to Stater Bros in the Lucky merger and they have maintained the restrictions against the very busy Target next door. This of course would give the politicians and unions something to complain about as the only intent Target could have would be to close the store; it is doubtful they would be interested in acquiring then subleasing to another grocer minus the limited food lease restriction or operating both sites.
This would not be allowed because any buyer stores will be divested to is going to have to agree to keep operating them as full service conventional grocery stores and keep the employees employed under the current employment terms. Target is not going to operate full service (since they don't know how to do that even in a Super Target- there is no meat cutting, basically no bakery/deli) so there is no way the stores are passed directly from Albertsons to Target.

Enter a middle scheme like Haggen to serve as a "pass through" entity to satisfy regulators that stores are sold to "another full service conventional grocer who is unionized and will keep everyone employed under the same terms of employment*"

*until pass through entity goes bankrupt a few months later after sales fell 60% and they laid off or cut hours of half of the employees then closes the store entirely. Then the store is sold in a bankruptcy sale to a non union operator like Smart & Final or something who has no service bakery/deli, no service meat, no union, and at that point the store may as well have been sold to Target to let Target get the lease rights to have P-Fresh in that shopping center and then let the grocery space just turn into whatever wants it.
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Re: Kroger to merge with Albertsons?

Post by ClownLoach »

Another fresh batch of propaganda. Not to get political but it's always amusing to read a piece that begins by saying that both the left and the right are wrong to oppose a deal like this. Usually when the left and right actually find something to agree on opposing that is a sign that something is really wrong.

https://www.aier.org/article/what-reich ... ompletely/
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Re: Kroger to merge with Albertsons?

Post by ClownLoach »

storewanderer wrote: March 19th, 2023, 8:58 pm
ClownLoach wrote: March 19th, 2023, 6:30 pm Another speculation I thought about - Target. Every time Target opened a store in conjunction with Albertsons in the same center they agreed to lease restrictions. Target is limited to only 300' of refrigeration and less than 10% of the sales floor may be food items. (My wife worked in one of these restricted stores) Apparently there are quite a few of these stores where the Albertsons next door hasn't changed hands. If Kroger-Albertsons put any of these up for sale in the divest strategy I would imagine Target would immediately offer to buy out the Albertsons so they could rid themselves of the restriction. Apparently it does transfer with ownership change; the Aliso Viejo store divested to Stater Bros in the Lucky merger and they have maintained the restrictions against the very busy Target next door. This of course would give the politicians and unions something to complain about as the only intent Target could have would be to close the store; it is doubtful they would be interested in acquiring then subleasing to another grocer minus the limited food lease restriction or operating both sites.
This would not be allowed because any buyer stores will be divested to is going to have to agree to keep operating them as full service conventional grocery stores and keep the employees employed under the current employment terms. Target is not going to operate full service (since they don't know how to do that even in a Super Target- there is no meat cutting, basically no bakery/deli) so there is no way the stores are passed directly from Albertsons to Target.

Enter a middle scheme like Haggen to serve as a "pass through" entity to satisfy regulators that stores are sold to "another full service conventional grocer who is unionized and will keep everyone employed under the same terms of employment*"

*until pass through entity goes bankrupt a few months later after sales fell 60% and they laid off or cut hours of half of the employees then closes the store entirely. Then the store is sold in a bankruptcy sale to a non union operator like Smart & Final or something who has no service bakery/deli, no service meat, no union, and at that point the store may as well have been sold to Target to let Target get the lease rights to have P-Fresh in that shopping center and then let the grocery space just turn into whatever wants it.
The problem is that assumes the store is actually divested in a FTC or State AG approved and run process. That isn't what Kroger and Albertsons are trying to do. They're choosing their own stores and putting them up for sale to the highest bidder. Their goal is to get the highest possible price back so they can remove the overlap argument before the government can even present their case. The fact is that they don't have to wait for the government to approve anything and they may do as they wish unless someone steps in and stops them. So far that hasn't happened and the dangerous precedent was already set for the retail industry by the FTC acceptance of the 7-Eleven/Speedway deal where they self selected divested locations. 7-Eleven basically did the governments work for them and removed overlaps that would have been a point of contention in a suit. Yes, 7-Eleven may have chosen to keep store 1111 and sell 2222 while the government may have said that 1111 needed to go instead, but the end result is that when they were done they did clear up the overlaps which would have made the merger illegal. When they finished the job the FTC no longer had a valid argument and they got to choose the stores they wanted to go forward with. And the courts backed this up. My new area is full of divests from that deal and I have to admit that the C-store business here is the most competitive I've seen anywhere with the introduction of Jackson's and others via the merger deal. Who knows what the government would have done instead?

Back to the Target discussion - the FTC should absolutely allow a pass through deal like you're suggesting with Target and these Albertsons sites because their lease actions are anti-competitive. That or the combined Kroger-Albertsons needs to remove all anti-competitive lease language in the food category as a condition of merging.

As much as I distrust Kroger in this deal, I have little confidence that the government would do a better job of choosing what stays and what goes. These guys didn't have any problems leaving a Vons across the street from an Albertsons in the last merger yet they made them divest random stores that were miles away from another just because they were in the same zip code and when Haggen collapsed they created new monopolies of competitors that wouldn't have existed if they just left everything alone (example the two Gelsons in South Laguna Beach). The motive for profit in my eyes may actually be a good thing here as the companies would do a better job of planning this out than the bumbling idiots at the FTC. And if they don't find viable buyers like Save Mart and these stores close or become non-competitive by the time the FTC gets its bureaucratic paperwork together then they will look even worse. So they might actually have an incentive to get this right or their actions will be the last nail in their coffins. The FTC isn't running well in my book - they own the Haggen scenario just as much as Albertsons. It takes two to tango.
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Re: Kroger to merge with Albertsons?

Post by storewanderer »

ClownLoach wrote: March 19th, 2023, 9:54 pm
Back to the Target discussion - the FTC should absolutely allow a pass through deal like you're suggesting with Target and these Albertsons sites because their lease actions are anti-competitive. That or the combined Kroger-Albertsons needs to remove all anti-competitive lease language in the food category as a condition of merging.

As much as I distrust Kroger in this deal, I have little confidence that the government would do a better job of choosing what stays and what goes. These guys didn't have any problems leaving a Vons across the street from an Albertsons in the last merger yet they made them divest random stores that were miles away from another just because they were in the same zip code and when Haggen collapsed they created new monopolies of competitors that wouldn't have existed if they just left everything alone (example the two Gelsons in South Laguna Beach). The motive for profit in my eyes may actually be a good thing here as the companies would do a better job of planning this out than the bumbling idiots at the FTC. And if they don't find viable buyers like Save Mart and these stores close or become non-competitive by the time the FTC gets its bureaucratic paperwork together then they will look even worse. So they might actually have an incentive to get this right or their actions will be the last nail in their coffins. The FTC isn't running well in my book - they own the Haggen scenario just as much as Albertsons. It takes two to tango.
I tried to read the article you linked but I just couldn't process most of what it said.

This is an interesting point. If they self divest, regardless of what actions they take when self divesting (like selling a food lease right to Target and closing the store) they would remove the competition. And the FTC, union, and various politicians couldn't do a thing about it (or could they try to sue for actions already taken and potentially un-do said actions...). This would also ensure the people who bought stores... could actually pay for the stores. Not that they are given stores under the gun of the FTC because they are an "experienced grocer who will honor all union contracts" like with Haggen. Not because they are "independent grocers" and "some stores need to go to independent grocers or they will sue for treating them unfairly" like with Albertsons/ASC in 1999 where a block of stores went to Certified Grocers to be passed out to independents and the majority had financial problems almost immediately.

FTC does not have a good tract record when it comes to successful divesting of grocery store assets in the western United States and this goes back decades.

The nightmare scenario I see is if they divest stores and have the stores to new buyers before the merger occurs, then FTC/unions/AGs do something at the 11th hour before the merger closes to stall/delay/get the merger canceled. If that happens, whatever chain did the divesting (I expect the majority of divests will be Albertsons/Safeway units... unless all of F4L or all of QFC get divested since they are somewhat "irregular" assets) is going to be left in a bit of a mess if the merger ultimately does not get completed.

Also I think for instance CA could block the transfer of liquor licenses, ability to accept food stamps, and ability to accept WIC to effectively stop any store divests/sale and then the merger in its tracks if they do not agree with the store divest/sale.
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Re: Kroger to merge with Albertsons?

Post by HCal »

ClownLoach wrote: March 18th, 2023, 1:39 pm
As far as the regional stores go, I've asked this question since the beginning. Why should they have to spend their money to help subsidize this deal? Because if they are needed to buy stores, even if they are sold for a dollar each, they are still having to invest in them. They still have to spend their available cash (or borrow from an available lender... Hello, Apollo?). Why should they have to get involved? It's a pretty arrogant assumption on Kroger and Albertsons behalf to think that they can merge with the help of their competitors who (with the possible exception of Save Mart) will be financially worse off as a result? What if they are perfectly happy as they are? If the FTC says something like "You must divest these ten Ralphs, five Vons and eight Albertsons to Stater Bros." do they have to take the stores? (Reason I say that is it seemed like stores divested in the Lucky-Albertsons deal weren't all big hits for Stater and others).
The FTC can't force anyone to buy stores. The buyers have to agree to it.

Kroger and Albertsons know that finding buyers for the stores that need to be divested is critical to getting the merger approved, so they have every reason to offer the stores at a good price, along with whatever else (such as transitional support) the buyers want.

Also note that the FTC has no leverage over the buyers and can't make them do anything. They can't say "you can't close the store for X years" or anything like that.
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Re: Kroger to merge with Albertsons?

Post by veteran+ »

rwsandiego wrote: March 19th, 2023, 11:54 am
veteran+ wrote: March 19th, 2023, 8:00 am Yep, you are both spot on about Publix.

Their ideology and hubris will never allow them to get involved in a Union environment or be bought out. The DNA of this company is JENKINS (related or not) and it will remain so.

They are not innovators, plus it is the Publix way or get lost.

IMO, their cult like success is about historical "luck" and a PR and Ad campaign that has hypnotized their customers (whom do not have significant choices) and "the industry" that they are the utopia of supermarkets.
A Chicago friend moved to Florida a few years ago and shops almost exclusively at Publix. Her reasons for doing so are convenience, lack of alternatives (a neglected Winn-Dixie across the street from Publix and a Walmart neighborhood Market whose parking lot is hard to get in and out of), and their employees are friendly. My cousin, also an ex-Chicagoan, says the same. Both have mentioned several times "Publix is fine, but it isn't as good as Jewel." You hear that a lot from ex-Chicagoans.
May I ask, what part of Florida?

The more south you go the worse Publix gets.
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Re: Kroger to merge with Albertsons?

Post by veteran+ »

Bagels wrote: March 19th, 2023, 5:07 pm
storewanderer wrote: March 19th, 2023, 1:17 pm
veteran+ wrote: March 19th, 2023, 8:00 am Yep, you are both spot on about Publix.

Their ideology and hubris will never allow them to get involved in a Union environment or be bought out. The DNA of this company is JENKINS (related or not) and it will remain so.

They are not innovators, plus it is the Publix way or get lost.

IMO, their cult like success is about historical "luck" and a PR and Ad campaign that has hypnotized their customers (whom do not have significant choices) and "the industry" that they are the utopia of supermarkets.
Well, the customers did have choices... the choices mostly went out of business as Publix outperformed them in Florida.

What I find more interesting about Publix is their organic expansion outside Florida. In the modern times the only other chain that has had such a successful long running organic expansion program covering so many states/territories in the grocery business is Wal Mart. Wherever Publix expands, customers seem to view them as the "superior" option. Look at Atlanta as a good example. People saw Kroger as some kind of a low end operator and people there seem to just love Publix. In Nashville my observation was Publix wasn't doing great (Kroger always busier if nearby) but anyone you ask about Publix has a positive opinion of them.

Where I think Publix excels is in basics of Grocery 101. The stores are generally clean, orderly, well stocked, and well staffed. The stores do not feel run down. Perimeters are staffed/open when the store is open (which isn't very late). Publix strikes me as quite dependable. Service is interesting- great outside FL, awful in Miami (seems to be a Miami thing), and varying from marginal to okay in other parts of FL. My other observation is Publix allocates proper staffing dollars to its stores to have adequate staffing levels for the volume they do. They also seem to have a very tight grip on shrink (part of why I think their meat and produce areas are not good- they hardly put any product out in so many of their stores and pricing is high).
As you know, Harris Teeter was a small but fast growing chain. Kroger acquired the chain after a bidding war and put the brakes on its rapid growth... because outside of its core markets, it wasn't profitable.

Yes, collectively Publix stores are the nicest of any significant (large) chain. Yes, Publix has the best deli and bakery (of any large chain). Yes, its produce, meat/ seafood is among the best. Yes, nearly everybody who's been in Publix is "wow'd" by it. Yes, Publix won the Florida grocery stores wars, with numerous large operators attempting to build out specific regions in the 1990s but all dropping out. Two big reasons for this -- the biggest being that they looked for the highest volume stores in a given area by a competitor and built a new, better store nearby. The other is demographics -- in the 90s and into the 00s, much of Florida was largely poor/lower middle class OR upper middle class/rich... it was among Walmart's first buildouts and they captured the first group, whereas the second wanted something better.

In Atlanta, Publix overtook Kroger in market share in 2010, but Kroger came out on top just a year or two later and hasn't looked back since. Despite Atlanta ranking in the top 5 in high paying jobs added over the past decade. Nashville's also in that top 5, and Publix hasn't made much inroads there basically since it entered the market 20 years ago. People love Publix, but most think it's too expensive to shop there.
Perhaps your "best" comments may be true of your experiences in the northern parts of the Publix territories?

My experiences with them in the southern branch (along with my entire family) is different. They are not good with fresh at all (this has been written about in the trade journals). I am not talking about rotten product, but more about really fresh, great tasting and quality fresh product. More accurate for the southern parts regarding fresh would be "okay".
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