Kroger to merge with Albertsons?

[storewanderer]

With all due respect, you are only partially correct. When Safeway first bought Von's all pricing and marketing (among other departments) were separate. Prior to the Dominicks and Genuardi's fiascos Safeway centralized everything. I know people that were laid off when this happened. All pricing departments and commodity managers at Vons and other divisions were laid off and everything was controlled by Corporate in Northern California, which I would argue is why all but one of the chains Safeway bought failed miserably. It was part of the the "SSIMS" conversion. "Safeway Single Image Solution". You may dislike Vons for their stores which I agree with in many circumstances(which by the way many were previously Safeway stores), but there is no question that at the time Albertson's came into the picture, all control was at the corporate level and the divisions had minimal input.

I find some of the worst Vons to be those former Safeway units of the 70's. 35k square foot stores with a dreary interior, narrow aisles, tiny bakery/deli squeezed in, run down, floors are in terrible shape, sloppy merchandising, just terrible stores. The Vons build stores of the 90's (bakery/deli side wall and produce across from it) are nicely laid out stores. The lifestyle remodels were a good band aid but they needed another serious upgrade 5 years ago and it didn't happen. I am sure these stores are profitable but they are awful. The NorCal Stores in this size range tend to be maintained a lot better for some reason.

Under Albertsons, Bob Miller pushed some degree of de-centralizing to try to repair things (and pull together the Albertsons and Safeway banners); the SoCal division started to run its own ads, do some of its own perimeter merchandising again, etc. That continues to this day. Back under Safeway you walked into a Vons and you walked into a Safeway in CA/OR/WA/NV and you got the same items at many of the same prices and the same ads. It is not like that under Albertsons; the divisions have entirely different ads, perimeter programs, even employee uniforms.

So that is the irony with Vons. Under Safeway, you could have had stores with the name "Vons" under 3 different divisions and the customer probably wouldn't have known the difference. But Safeway never did that; all of Vons was part of Vons Division with the limited/operational HQ staff out of Arcadia. But now under Albertsons, having "Vons" under 3 different divisions yields 3 very different "Vons" experiences for the customer who travels.

[storewanderer]

I do not believe that Kroger has any real respect for the banners under the Kroger umbrella.

What they have done to Ralphs (and others) makes it very clear. So that makes it very possible in the near future for them to go with the Kroger name nationwide (IMO).

I know I keep on harping about Ralphs but the customer reviews agree.

There are some better Ralphs for sure but even those share some of the same negatives, especially when dealing with corporate customer service.

Kroger feels like the General Motors of long ago............full of Hubris!

I've had a couple okay experiences with Kroger Corporate Customer Service lately (always about a digital coupon not working). Hold times were minimal; one time the whole thing was handled by robot and I was credited the missing coupon. The other time I did talk to someone but they handled the issue quickly. The third time I emailed them and it took a few days for a reply but they did get back to me and issued a credit.

I called Albertsons Customer Service recently and while the person who assisted me was very pleasant the process was unbelievably slow, I was on the phone for close to 15 minutes for a digital coupon not working and the interaction was very routine with just the most basic questions to be answered, everything was just so so slow. It seemed to take them forever to pull my transaction, pull the digital coupon details, etc.

Kroger/Albertsons customer service lines are great compared to general merchandise chains, electronics chains, drugstore chains, or banks.

[bryceleinan]

I do not believe that Kroger has any real respect for the banners under the Kroger umbrella.

What they have done to Ralphs (and others) makes it very clear. So that makes it very possible in the near future for them to go with the Kroger name nationwide (IMO).

I know I keep on harping about Ralphs but the customer reviews agree.

There are some better Ralphs for sure but even those share some of the same negatives, especially when dealing with corporate customer service.

Kroger feels like the General Motors of long ago............full of Hubris!

I've had a couple okay experiences with Kroger Corporate Customer Service lately (always about a digital coupon not working). Hold times were minimal; one time the whole thing was handled by robot and I was credited the missing coupon. The other time I did talk to someone but they handled the issue quickly. The third time I emailed them and it took a few days for a reply but they did get back to me and issued a credit.

I called Albertsons Customer Service recently and while the person who assisted me was very pleasant the process was unbelievably slow, I was on the phone for close to 15 minutes for a digital coupon not working and the interaction was very routine with just the most basic questions to be answered, everything was just so so slow. It seemed to take them forever to pull my transaction, pull the digital coupon details, etc.

Kroger/Albertsons customer service lines are great compared to general merchandise chains, electronics chains, drugstore chains, or banks.

Safeway social media is pretty good… I sent them video from the Edgewater Inn in Coos Bay with audio from our room of the hood exhaust / HVAC making tons of noise audible from inside our room. They responded right away and I received a message back from a manager that maintenance got called out. This was more of a response than anyone at the hotel had received.

[storewanderer]

Safeway social media is pretty good… I sent them video from the Edgewater Inn in Coos Bay with audio from our room of the hood exhaust / HVAC making tons of noise audible from inside our room. They responded right away and I received a message back from a manager that maintenance got called out. This was more of a response than anyone at the hotel had received.

The store management must have been scared to initiate a call to maintenance on their own despite hearing from the hotel. That seems to be how it works with these large chains- until a complaint gets to the right people, no matter how legitimate it is, nothing gets done.

The irony is that noise was probably causing additional damage to the system, meaning not fixing it sooner just ends up costing even more...

[HCal]

But it should. There is actually some confusion about this down in Las Vegas with Vons. Multiple people I've talked to from SoCal go to Vons and it is nothing like the Vons they are used to back home, then eventually figure out it is actually a Southwest Division Albertsons Store, but the sign out front says Vons, it has a smaller product mix, and you still need the club card.

That may be, but I really doubt too many people even notice, let alone care. It's relatively rare for people to go grocery shopping while traveling, and unless they are really paying attention, they are unlikely to notice variations in product mix. They may notice major differences (such as pharmacy vs. no pharmacy) but that's a non-issue. Most people are used to different types of stores under the same banner, for example "Walmart" can be a supercenter or a D1 store, "Target" can be a super Target, a regular Target, or a mini Target, and so on.

The more I think about it the more I think this may be the right time to rebrand all markets to Kroger. I really hesitate with doing that and I think it would be especially damaging for the former Safeway operations especially NorCal, but this is a definite crossroads and whatever decision they make on banners with this merger, is going to dictate the future. I don't see them rebranding 150 Vons/Albertsons/Pavilions stores in SoCal to Ralphs in 2024 then turning around a few years later and rebranding all of those to Kroger, for instance.

Now that I think about it, Kroger has never rebranded any major chains that they acquired... if not never, then at least not for the last few decades. They have only rebranded small chains (<25ish stores). This has been a very successful approach for them, and I see no reason why they would want to change it.

I can imagine people in the bay area wondering why the heck a company that makes private label products for a scrappy Hispanic-focused discount store is suddenly taking over a major supermarket chain.

[storewanderer]

Now that I think about it, Kroger has never rebranded any major chains that they acquired... if not never, then at least not for the last few decades. They have only rebranded small chains (<25ish stores). This has been a very successful approach for them, and I see no reason why they would want to change it.

I can imagine people in the bay area wondering why the heck a company that makes private label products for a scrappy Hispanic-focused discount store is suddenly taking over a major supermarket chain.

Even some very small chains, they've kept. This is why there are still stores under banners like Gerbes, Scotts, Owens, Pay Less, etc.

Kroger's acquisitions the past 20 years have been in mostly new markets so there is no reason to rebrand. They did get rid of Kroger in RDU in favor of Harris Teeter, that has been their biggest "wave" as far as rebranding a market but that was one they even sold a Kroger to Food Lion, closed many Krogers, and converted the rest to Harris Teeter after closing for months (firing the Kroger employees in the process...).

And there may not be a reason to rebrand in new markets with this deal either. It really depends on the store divests and what banners go with what owner and how they want to approach that (do they want multiple parties operating with the Safeway name in bordering markets, for instance).

Majority of bay area customers don't even know FoodsCo exists. Too few stores in locations folks typically aren't going into unless they live/work nearby. In the immediate bay area (Oakland, Pittsburg, Richmond, San Francisco Stores), FoodsCo is catering to more African American and Asian American customers than Hispanic customers. Down in Salinas/Soledad it shifts and it is catering very heavily to Hispanic customers. FoodsCo is very appreciated by the locations where it has stores in NorCal. These stores provide far below market pricing and provide a store in locations where the alternative is going to be a small independent with a lower mix of products and far higher pricing and the customers know it. The employees who work in these stores also appreciate the stability of FoodsCo being there and staying open (too bad the Ralphs/Cala/Bell employees didn't get the same favor).

[pseudo3d]

They did centralize buying at Albertsons under Sankaran, that's probably why the merchandise mix has changed. Kroger really doesn't compete in "South Texas" anymore, except for Houston, and the main reason why H-E-B has become successful is that they outbuilt Kroger, and heavily advertised on not having on a shopper's card (which Randalls also had). The stores are all hit and miss. When I was living in Houston, I generally preferred H-E-B, because their stores tended to be larger and their produce was much better than Kroger (even if Kroger undercut H-E-B on a few produce items). In comparison, the independents had horrible produce (cheap though) and very high center store prices.

HEB's fabled reputation is most responsible for its success. Kudos to HEB for developing a brand that's earned such reputation, and draws tremendous excitement. But I'd bet if HEB expanded into Atlanta or Southern California, it'd falter pretty quickly.

Kroger hasn't "standardized" its store fleet anymore than just standardize the décor. Again in the days I lived in Houston, I had seen the Kroger Signature stores, the converted Albertsons stores, even a fairly well-preserved Greenhouse, and all of them ranged wildly in quality. I had stores that I actually preferred to the H-E-B stores and there were disgusting ones that should've been put out to pasture years ago. But hey— most supermarket chains are like that.

Kroger operates several thousand stores, in various sizes, built by numerous operators over several decades. Of course they're not going to have the same layout. But the stores themselves are very standard - if I'm looking for canned fruit and have never been in a King Snoopers and locate the canned goods section, I know it will be there. This isn't true at Albertsons. Heck, just a few years ago, it was in different locations within the same market.

Where Albertsons/Safeway dropped the ball in the interim years (2005-2015) was not building out larger stores. Albertsons stores were once some of the largest stores in the market, but when it came to Kroger Marketplace and H-E-B's larger prototypes (which they had started building in the 1990s), they just blow them away.

The industry has been gravitating toward smaller stores. Most of the non-Marketplace (without GM) stores Kroger and Albertsons have built in the past 5 years or so are less than 50K SQ. Some operators - like HyVee and Meijer - prefer larger stores but those are outliers.

The industry did bump its head when it came to expanding stores in the 1990s, but the "smaller stores" trend has been circulating at least since Fresh & Easy was a threat and stores rolled out prototypes like a small-scale "The Market by Safeway". In reality, the stores that do expand are large stores. Albertsons, Kroger, even Schnucks, most of those do not expand organically anymore. The ones that do expand--Hy-Vee, H-E-B in particular, do push for larger stores. Wegmans has downscaled the sizes of its new builds in recent years but 80k square feet is still nothing to sneer at. The one exception is probably Publix, which has never been one for big stores anyway...and their stores are not designed to be soulless warehouses (terrazzo, or at least terrazzo-style flooring).

Of course, merchandising is going to be the challenge. You can't just build a 120k square feet Albertsons (without a ton of specialty departments--we're not talking Albertsons Market Street here) because there's really no infrastructure for non-foods, the ones that have that size with big non-food sections have either an established GM division (Fred Meyer), have invested in it over the years (H-E-B), or has partnered with others (Hy-Vee).

On Kroger, I was quite surprised in my area when they decided to expand a 2006 store from a 73k square foot store into a 95k square foot store (and still, not a Marketplace); despite by that time being outnumbered by H-E-B 5 to 2. It was a massive store though on my first visit I found it extremely disorienting because the service departments on the west side had all been completely gutted and moved to the new side; basically the entire store had been flipped. I don't know where Kroger is building 50k square feet stores but that doesn't seem to the case here.

On the other hand, with a few exceptions (and usually these are all acquired stores to begin with), you don't see many Albertsons going past 70k square feet.

[Bagels]

The likelihood of Kroger rebranding Safeway in Northern California (and Hawaii) to the Kroger banner is barely above -0-. Almost unquestionably, Safeway in Northern California/Hawaii, Albertsons in the Mountain West, Jewel and ACME will retain their banners. Any stores kept elsewhere in the West or Texas will most likely be re-bannered. I also wouldn’t be surprised if some micro banners, like King’s, are eventually converted to a larger banner (ACME).

The two most questionable would be Shaws/Star and Safeway in DC. If I had to bet, I’d say Shaws/Star will keep their banners, but allegedly they’re so poor performing Albertsons has considered pulling the plug, so maybe they’d benefit from a rebranding.

And I’ll bet Safeway will be operated alongside Harris Teeter in DC for a few years until they merge under a single banner. HT has grown in Northern Virginia, mainly by entering new shopping centers, but while it’s been gaining market share, allegedly it’s unprofitable (hence why Kroger put the brakes on expansion after years of rapid growth). So who knows?

[storewanderer]

I don't know where Kroger is building 50k square feet stores but that doesn't seem to the case here.

I don't know either. Kroger new builds (outside Ralphs and QFC) seem to start at a minimum of about 60,000 square feet.

I have heard stores planned upwards of 90,000 square feet in recent years with the Kroger banner and those aren't Marketplaces. I think a Frys opened somewhat recently in AZ without Marketplace and is in the 90k square foot range.

In the early 00's Kroger was doing some 50k-ish square foot builds at King Soopers, Smiths, and maybe Frys too. I suspect this may have been after so many early 00's Ralphs that were in the 60k square foot range flopped. Problem is after 2010 as Kroger increased volume so much, these stores which were built with small back rooms and some small departments, and were too small and they adjusted going forward back to larger prototypes and a lot of Marketplace stores in the 2010's.

[storewanderer]

The likelihood of Kroger rebranding Safeway in Northern California (and Hawaii) to the Kroger banner is barely above -0-. Almost unquestionably, Safeway in Northern California/Hawaii, Albertsons in the Mountain West, Jewel and ACME will retain their banners. Any stores kept elsewhere in the West or Texas will most likely be re-bannered. I also wouldn’t be surprised if some micro banners, like King’s, are eventually converted to a larger banner (ACME).

The two most questionable would be Shaws/Star and Safeway in DC. If I had to bet, I’d say Shaws/Star will keep their banners, but allegedly they’re so poor performing Albertsons has considered pulling the plug, so maybe they’d benefit from a rebranding.

And I’ll bet Safeway will be operated alongside Harris Teeter in DC for a few years until they merge under a single banner. HT has grown in Northern Virginia, mainly by entering new shopping centers, but while it’s been gaining market share, allegedly it’s unprofitable (hence why Kroger put the brakes on expansion after years of rapid growth). So who knows?

The only scenario I see a rebrand in NorCal is if Kroger loses rights to Safeway name (gives it to whoever takes divest stores) or if Kroger rebrands all stores to Kroger nationwide.

I am not so sure about the Albertsons banner and what future it has.
1. Las Vegas and Albuquerque are two strong markets for the Albertsons banner. Smiths is, however, much stronger. I expect Smiths banner to survive as the single banner in those two markets.
2. Albertsons banner is I expect will be eliminated in CA, OR, WA, CO, Dallas, LA, AR, and AZ if they do any branding consolidations.
3. What exactly does that leave with the Albertsons banner?
Idaho: 39 stores
Montana: 29 stores
North Dakota: 1 store
Wyoming: 9 stores
El Paso/Las Cruces: 11 stores
Basically Boise (I know... but how many stores will they even get to keep in Boise...), El Paso (they could rebanner and not be hurt), and MT/WY (I think the current Smiths or King Soopers banner would do fine plus there are going to be divests happening there).

I think Shaws/Star will keep their banners because I question how long those will even be around or owned by Kroger. Getting things straightened out west and realizing the synergies from the various consolidation of banners/distribution/middle management are going to be pressing matters. Shaw's/Star can stay an island and integrate last (similar to how it integrated into Safeway systems last and ended carrying Supervalu brands last after the Albertsons merger).

I think the lack of HT profitability is due to bad leases they signed. Those HT are not very good anyway. The divests will give them an opportunity to dump some of those if they really want to.... because there is definitely overlap with Safeway...