Kroger to merge with Albertsons?

[pseudo3d]

His exact quote was:

"And every store that we keep, we will begin lowering prices day one."

This quote seems to suggest that he knows there will be significant divestitures. I still think if something were to happen Kroger will only end up with maybe 1/2 of Albertsons' stores when all is said and done if it even occurs.

SpinCo will take the stores that they cannot sell to anyone else and a few other parties will arise to take whole divisions.

I doubt they can sell whole divisions to other companies. Selling it to foreign companies (Chedraui, Loblaws) seems like more fantasy than anything else, and I read that UNFI had already de-confirmed buying stores.

With the dividend to pay out, I hope that with their pound of flesh secured, they can focus on improving the company whether or not Kroger destroys it. Better take their payout now instead of whittling away the company for years on end.

[storewanderer]

His exact quote was:

"And every store that we keep, we will begin lowering prices day one."

This quote seems to suggest that he knows there will be significant divestitures. I still think if something were to happen Kroger will only end up with maybe 1/2 of Albertsons' stores when all is said and done if it even occurs.

SpinCo will take the stores that they cannot sell to anyone else and a few other parties will arise to take whole divisions.

I think the Kroger CEO who worked his way up to his position after working in stores Is a very down to Earth individual who knows this merger may or may not happen and realistically knows a lot more divests are likely than the 100-200 they were initially throwing around. And in the back of my mind I look at it this way- the more divests, the less debt Kroger takes on, which may be a good thing. There are a lot of junk stores or stores that are for other reasons a poor fit for Kroger, and they can relieve themselves of some of those via the divests.

[pseudo3d]

His exact quote was:

"And every store that we keep, we will begin lowering prices day one."

This quote seems to suggest that he knows there will be significant divestitures. I still think if something were to happen Kroger will only end up with maybe 1/2 of Albertsons' stores when all is said and done if it even occurs.

SpinCo will take the stores that they cannot sell to anyone else and a few other parties will arise to take whole divisions.

I think the Kroger CEO who worked his way up to his position after working in stores Is a very down to Earth individual who knows this merger may or may not happen and realistically knows a lot more divests are likely than the 100-200 they were initially throwing around. And in the back of my mind I look at it this way- the more divests, the less debt Kroger takes on, which may be a good thing. There are a lot of junk stores or stores that are for other reasons a poor fit for Kroger, and they can relieve themselves of some of those via the divests.

According to Wikipedia, McMullen spent four years working in a store during college, then got a job as a financial analyst in corporate, and has been working corporate for the last 40 years. He's got more grocery experience than Sankaran does (that's a given), but I wouldn't exactly call McMullen "working his way up from the stores" and/or has some humility because of that.

[retailfanmitchell019]

Thing in Chicago is, Jewel just flat out has great stores. They are well located stores and they are just great stores. They are big stores, well laid out, with big parking lots, with good access and visibility. You just can't duplicate Jewel. Almost every store has pharmacy and a large non foods department. Jewel has the whole package... King Soopers in Denver is very similar to Jewel the main difference being Denver could see competition as there are still big spaces there for competition to come in. I don't even think Kroger will change much at Jewel. I expect they will throw their private label program into the stores and as far as the rest of it goes they will let Jewel keep doing its thing. Jewel already has lower pricing than most of the Albertsons divisions (always has), price is not as much of an issue at Jewel as it is at Safeway. Jewel already runs very high store volumes with many full cart shops and highly satisfied customers who are loyal to Jewel. This is just the type of store the successful Kroger divisions run (King Soopers, Fred Meyer, Frys, Smiths, etc.).

Judging by how Safeway managed Dominick's (Chicagoans seem to be very attached to their supermarkets and local brands), throwing in their cookie-cutter merchandising that was done everywhere but Canada, and throwing in Safeway branded products and Safeway-style advertising, I doubt Kroger will run Jewel well, by implementing Kroger everything, like making Jewel ads with characters "getting low" if you know what I mean.

Under Old Albertsons, Jewel felt semi-autonomous from Albertsons: they mostly had their own store interiors (a great interior that they gave to Albertsons for new builds and remodels).
Jewel never used Albertsons-style advertising until 2003, when Patricia Heaton did ads for Jewel (Helping Make Your Life Easier campaign). There must've been some backlash in Chicago, as Jewel reverted back to their "Fresh to your family" slogan in early 2006 (Albertsons stopped using Patricia Heaton in ads in early 2007, when they went to the "Crazy About Food" slogan). Jewel continued that "Fresh to your family" slogan through the SuperValu years, and even still uses it in ads today.
Jewel kept their Jewel brand on the shelves, until SuperValu Essential Everyday-ed everything. The only "Albertsons" brand products sold at Jewel were "Sav-on Osco by Albertsons" (non-food brand, split into Equaline and HomeLife), and "Baby Basics by Albertson's" (baby products, later shortened to Baby Basics).

[rwsandiego]

Safeway tried to make Chicago work? It couldn't.
Kroger tried to make Chicago work? It couldn't.

I agree that Safeway failed miserably in Chicago, mainly because of corporate hubris. Safeway changed more than the house brands, they changed the house brand product mix and the quality of said house brands. When Yucaipa acquired Dominick's, they added Private Selections brand products but they didn't take away any of the Dominick's brand specialty foods. (They had a line of Italian products that was really quite good). They expanded the Fresh Store concept and improved perishables quality (which was never a Dominick's strong suit). Safeway did away with all that, couldn't compete with Jewel, and failed.

Kroger failed in the 1970's because they didn't open new stores in growing suburbs and did not replace aging stores in the city. Jewel crushed them (as they did with A&P and National) by opening a lot of stores, most of which had pharmacies and a full-line drug store (Osco), not just an anemic HBA department. Mariano's, in my opinion, is a different story. To me, the model was unsustainable and was already showing cracks before Kroger bought Roundy's. IMO, Mariano's would be the same or worse had Kroger not bought it. Roundy's brand isn't exactly glamorous or sexy. The prepared foods were not quite as good as they could have been, produce was iffy, and center store was kind of a joke. They are kind of "Dominick's Lite." As long as they didn't f-up too badly, they would have limped along as did pre-Safeway Dominick's and they would have remained in Jewel's shadow.

It's kind of funny that the only successful conventional chain in Chicago is a chain whose owner has been severely mismanaged for the better part of the last 20 years. In a way Jewel is the Albertsons equivalent of Farmer Jack in Detroit for A&P (remember as late as the mid 1990s Farmer Jack almost chased Kroger out of Michigan). ...

Jewel has pretty much been left to its own devices. Essential Everyday aside, even SVU didn't screw it up too badly.

Thing in Chicago is, Jewel just flat out has great stores. They are well located stores and they are just great stores. They are big stores, well laid out, with big parking lots, with good access and visibility. You just can't duplicate Jewel. Almost every store has pharmacy and a large non foods department. Jewel has the whole package.....

Also, they have 188 of them, 180 (ish) of which are in one metro area having 9 million people.

My guess is Kroger would figure out (or already has, given they compete) that Jewel is just fine the way it is and they not only shouldn't mess with it but could adopt some of Jewel's business model in the rest of the chain.

...
Chicagoans seem to be very attached to their supermarkets and local brands)...

West Coasters don't understand the mindset of big cities east of the Mississippi River. Like New York City, Chicagoans and Chicago suburbanites identify very closely with the city itself and the fact that they are from there and/or choose to live there. It isn't as transient and transplanted as is the West Coast or the Southwest.

...Selling it to foreign companies (Chedraui, Loblaws) seems like more fantasy than anything else...

Personally, I think Westfarmers or Woolworth's would be a great acquirer. Or maybe Morrison's. Oh, hell, let's throw Spinney's in there too. .

[storewanderer]

How many Mariano's and Food 4 Less Stores in Chicagoland has Kroger closed?

I haven't kept track. I am not aware of significant closures by Kroger, just low store count. So I am not sure if I agree that Kroger isn't making Chicago work... I think they just have few stores.

It will be interesting to see what they do, I am not sure how much overlap there is between F4L and Jewel. Mariano's is a problem.

Recall the last time this happened the Cub Stores were the ones divested in Chicagoland and the buyer Cerberus put them into liquidation sales almost immediately but some other chains picked up some stores like Ultra Foods. I'd like to see Mariano get Mariano's back.

[retailfanmitchell019]

Recall the last time this happened the Cub Stores were the ones divested in Chicagoland and the buyer Cerberus put them into liquidation sales almost immediately but some other chains picked up some stores like Ultra Foods. I'd like to see Mariano get Mariano's back.

I wonder if Schnucks would have interest in Mariano's also?
A wild card could be Hy-Vee picking up the stores to get an easy entrance ticket into Chicago. Both Hy-Vee and Schnucks have stores in DeKalb, a Chicago exurb.

[storewanderer]

Recall the last time this happened the Cub Stores were the ones divested in Chicagoland and the buyer Cerberus put them into liquidation sales almost immediately but some other chains picked up some stores like Ultra Foods. I'd like to see Mariano get Mariano's back.

I wonder if Schnucks would have interest in Mariano's also?
A wild card could be Hy-Vee picking up the stores to get an easy entrance ticket into Chicago. Both Hy-Vee and Schnucks have stores in DeKalb, a Chicago exurb.

I do like Schnucks but I don't think they'd make it in Chicago. Their mix/pricing is not the right fit for the market and would need serious deviations to work.

Hy-Vee could make Chicago work but given they seem to have lost interest in building up Minneapolis further (which would be a much easier market to crack than Chicago), I question their desire.

There is a lot of growing competition in Chicago; smaller operators with ~10 stores, etc. Despite Jewel being the big gun in the market and from the outside they look like they rule the place, while they are very strong, there is A LOT of competition.

[Romr123]

Yeah, Chicago's big enough and dispersed enough that you might see a Schnucks or a Hy-Vee staying in a corner of the metro with a reasonable density of stores (say Kankakee County and southern suburbs for Schnucks or Will County and western suburbs for Hy-Vee) and able to spot in 10-ish stores with their existing infrastructure. Don't think either has the stomach or capability to take on the entire Chicagoland area.

Kind of like how Eagle nibbled at the outskirts of Chicagoland for many years (they got as far east as Norridge and Niles).

When Certified/Central had their strong position on the distribution side, they supported a LOT of the intermediate sized small chains over the entire region. They seem to have disappeared into the ether over the last 25 years--don't really recall what happened though think there was a bankruptcy involved.

[pseudo3d]

Yeah, Chicago's big enough and dispersed enough that you might see a Schnucks or a Hy-Vee staying in a corner of the metro with a reasonable density of stores (say Kankakee County and southern suburbs for Schnucks or Will County and western suburbs for Hy-Vee) and able to spot in 10-ish stores with their existing infrastructure. Don't think either has the stomach or capability to take on the entire Chicagoland area.

Kind of like how Eagle nibbled at the outskirts of Chicagoland for many years (they got as far east as Norridge and Niles).

When Certified/Central had their strong position on the distribution side, they supported a LOT of the intermediate sized small chains over the entire region. They seem to have disappeared into the ether over the last 25 years--don't really recall what happened though think there was a bankruptcy involved.

Central went bankrupt in 2017. The fallout closed their stores in Chicago, including Ultra Foods and the Chicago-area Strack & Van Til stores, but S&VT was able to return to family ownership with 20 stores.