Kroger to merge with Albertsons?

[jamcool]

They are doing nothing with Bashas’…no store remdodeling and no new stores (the last new store was a Dine’ Market in Sanders and converting the ex-City Market in Shiprock NM to a Dine’ Market)

[rwsandiego]

They are doing nothing with Bashas’…no store remdodeling and no new stores (the last new store was a Dine’ Market in Sanders and converting the ex-City Market in Shiprock NM to a Dine’ Market)

Hold that thought! I drove by the 32nd and Shea Bashas' today and it looked like some remodeling was going on. I wasn't able to stop and go inside, but I will try to get in later in the week.

[ClownLoach]

While there are articles out there that believe the FTC will do the same as every other merger in past years and approve of it, I still think that there is a chance the FTC will block the merger based off of the likeliness that the C&S deal can likely just be a complete repeat of Haggen.

In Southern California (I have doubts that any NorCal store will need to be divested), there's no doubt the FTC will require additional stores divested, as there are way too many overlapping stores. I wonder if the FTC will require divests in SoCal to go to a more local Chain like Save Mart, Raley's, or Stater. From what I heard, supposedly Stater did put some offers on some of the proposed SoCal divests, but Kroger/Albertsons likely declined looking instead for a buyer who could take a bulk, or even all of the stores. In terms of SoCal, it's clear that Kroger simply wants the larger Albertsons and Vons stores that are in better condition than the current deteriorating Ralphs.

If this merger doesn't go through, I've always thought a probable outcome for Ralphs could be similar to what happened to Albertsons in Florida. In Florida, Albertsons slowly sold chunks of stores at a time to Publix until Publix eventually acquired most of the remaining Albertsons stores in Florida. in 2017, Albertsons finally sold it's three remaining stores to Publix. If the merger doesn't happen, I wonder if Kroger will follow this pattern start selling pieces of it's deteriorating Ralph's chain to what would most likely be Stater, or less likely but maybe Albertsons, Raleys, or Save Mart (or maybe even C&S lol). It's apparent Kroger wants to make little to no further investment in it's current Ralphs portfolio, so without the merger, I see a possibility Stater will use the opportunity to further expand and buy chunks of Ralphs stores at a time, as Stater has already bought a few former Ralphs locations in the Inland Empire, I know one in Riverside was bought out by Stater at some point in the past few years.

Also a little off-topic side note, I wish a chain like Raley's would look to use the merger as an opportunity to expand to SoCal. I know the likelihood of them expanding farther South in CA is slim, but they nearly doubled in size in terms of store count when they purchased Basha's in 2021, and I think it would make sense to fill in the gap between NorCal and Arizona with a store base in SoCal, but it's definitely understandable that the cost to purchase divested stores, and spend money on inventory and renovations to the stores are quite an investment, so I can definitely see how taking time to absorb the Arizona Basha's stores may be the route they are taking now. Maybe they are waiting for "Haggen 2.0" to take it's course so they can buy the stores C&S acquires initially for pennies on the dollar

I think the same thing could be said about Kroger and the entire West Coast - QFC and Fred Meyer. The best investment we see them make is Fred Meyer which have received some very comprehensive remodels these last five years or so (probably to make up for some of the really ugly remodels they did before with very bad trenched concrete floors, drop ceilings without diffusers on troffer lights and such). Ralphs and QFC have received no CapEx except for a few isolated paint and patch projects that update the color and sign packages but otherwise do not replace any fixtures, lighting, cases or shelves. It seems like Kroger doesn't want to be anywhere in California, Oregon, or Washington outside of Freddy's stores. I really think the intentions with Albertsons are to move to use their management as their small format operator (small meaning anything below 80,000 Sq ft) and have them take over management of the Ralphs and QFC remnants if any remain (maybe East Vancouver/Camas WA and University Village?) since they know how to run smaller formats well. It is too hard and frankly too expensive to build a large full service supermarket in Southern California right now unless it's a guaranteed hit, and the only operator who seems to be willing to take those risks combined with true full "gut it to the 4 walls and start over" remodels is Stater Bros.

Despite what everyone believes here though I do not believe that they ultimately would be forced to divest as many SoCal stores because of how frankly terribly all three banners run here, and how much share they've given up to Walmart, Costco, Trader Joe's, Sam's and Target. I couldn't justify forcing divestitures unless they're across the street from each other at this point because I think the divestiture plan puts everything sold at risk of closing while this represents the last chance to restock the Kroger real estate holdings on the West Coast to try to be competitive again here and thus are paying so much they'll HAVE to keep them open no matter what. The situation with the strike almost twenty years ago was the worst decision they have ever made long term. Ralphs has for all intents and purposes evaporated, yes you can probably call out stores that are jam packed with customers but the facts are that nearly two thirds of their locations and inflation-adjusted sales have gone away in less than two decades under the mismanagement of Kroger. I wonder if Bonta is going to use that in his lawsuit to stop the merger - the fact that Kroger obviously doesn't care about California stores aside from a couple money makers and it's entirely feasible he could say the track record states stores have a better chance to stay open under Albertsons Cos. than Kroger.

[storewanderer]

If this merger doesn't go through, I've always thought a probable outcome for Ralphs could be similar to what happened to Albertsons in Florida. In Florida, Albertsons slowly sold chunks of stores at a time to Publix until Publix eventually acquired most of the remaining Albertsons stores in Florida. in 2017, Albertsons finally sold it's three remaining stores to Publix. If the merger doesn't happen, I wonder if Kroger will follow this pattern start selling pieces of it's deteriorating Ralph's chain to what would most likely be Stater, or less likely but maybe Albertsons, Raleys, or Save Mart (or maybe even C&S lol). It's apparent Kroger wants to make little to no further investment in it's current Ralphs portfolio, so without the merger, I see a possibility Stater will use the opportunity to further expand and buy chunks of Ralphs stores at a time, as Stater has already bought a few former Ralphs locations in the Inland Empire, I know one in Riverside was bought out by Stater at some point in the past few years.

Also a little off-topic side note, I wish a chain like Raley's would look to use the merger as an opportunity to expand to SoCal. I know the likelihood of them expanding farther South in CA is slim, but they nearly doubled in size in terms of store count when they purchased Basha's in 2021, and I think it would make sense to fill in the gap between NorCal and Arizona with a store base in SoCal, but it's definitely understandable that the cost to purchase divested stores, and spend money on inventory and renovations to the stores are quite an investment, so I can definitely see how taking time to absorb the Arizona Basha's stores may be the route they are taking now. Maybe they are waiting for "Haggen 2.0" to take it's course so they can buy the stores C&S acquires initially for pennies on the dollar

If you thought Haggen had issues in SoCal, Raleys will have many of the same issues if not more issues.

NorCal, SoCal, and AZ are 3 completely different markets. Raleys has problems in the bay area, seems to be having problems lately in Reno/Tahoe as evidenced by the store closure activity even if much of it is blamed on lease issues, and Safeway has taken a lot from them around Sacramento in the past 20 years. Raleys could be great and should be dominant over Safeway but Raleys seems to have ongoing issues that allow Safeway to keep beating them and seriously hurt them in expansions. The best play if Raleys has the money and desire to enter SoCal: buy Stater and leave it alone. Raleys own format will not do well in SoCal- they don't have the right mix or the right pricing. The ONE format will be an even worse failure. None of the Bashas formats would be successful either.

Raleys isn't "absorbing" Bashas at all, they are operating it as a separate unit. This is why there has been little to no change to Bashas. Raleys restructured itself before it bought Bashas and is now Raleys Holding Company and has put various business units as separate subsidiaries under that holding company including Bashas, Raleys, Aprium, and some other things. There is a layer of corporate management over the holding company then there are separate management layers over each subsidiary who report to the corporate management.

I think Ralphs and QFC are problems for Kroger. Ralphs is a huge missed opportunity and has been very mismanaged over the years. But Ralphs has a lot of very profitable stores and I think despite everything Ralphs has a good name and strong banner. I don't see Kroger doing further cuts to Ralphs, they have already done a lot of cuts and what is left mostly looks productive. I'd like to see more expansion but I doubt that will happen. QFC has intrinsic issues (very small stores, high price reputation).

[storewanderer]

I think the same thing could be said about Kroger and the entire West Coast - QFC and Fred Meyer. The best investment we see them make is Fred Meyer which have received some very comprehensive remodels these last five years or so (probably to make up for some of the really ugly remodels they did before with very bad trenched concrete floors, drop ceilings without diffusers on troffer lights and such). Ralphs and QFC have received no CapEx except for a few isolated paint and patch projects that update the color and sign packages but otherwise do not replace any fixtures, lighting, cases or shelves. It seems like Kroger doesn't want to be anywhere in California, Oregon, or Washington outside of Freddy's stores. I really think the intentions with Albertsons are to move to use their management as their small format operator (small meaning anything below 80,000 Sq ft) and have them take over management of the Ralphs and QFC remnants if any remain (maybe East Vancouver/Camas WA and University Village?) since they know how to run smaller formats well. It is too hard and frankly too expensive to build a large full service supermarket in Southern California right now unless it's a guaranteed hit, and the only operator who seems to be willing to take those risks combined with true full "gut it to the 4 walls and start over" remodels is Stater Bros.

Despite what everyone believes here though I do not believe that they ultimately would be forced to divest as many SoCal stores because of how frankly terribly all three banners run here, and how much share they've given up to Walmart, Costco, Trader Joe's, Sam's and Target. I couldn't justify forcing divestitures unless they're across the street from each other at this point because I think the divestiture plan puts everything sold at risk of closing while this represents the last chance to restock the Kroger real estate holdings on the West Coast to try to be competitive again here and thus are paying so much they'll HAVE to keep them open no matter what. The situation with the strike almost twenty years ago was the worst decision they have ever made long term. Ralphs has for all intents and purposes evaporated, yes you can probably call out stores that are jam packed with customers but the facts are that nearly two thirds of their locations and inflation-adjusted sales have gone away in less than two decades under the mismanagement of Kroger. I wonder if Bonta is going to use that in his lawsuit to stop the merger - the fact that Kroger obviously doesn't care about California stores aside from a couple money makers and it's entirely feasible he could say the track record states stores have a better chance to stay open under Albertsons Cos. than Kroger.

Putting Safeway in charge of anything under 80k square feet would put them in charge of most of Frys, Smiths, Dillons, King Soopers, Kroger-Texas... I do not see that happening given those formats have largely slaughtered Albertsons/Safeway formats in their markets. I'm not sure I'd put Safeway in charge of anything much over about 40k square feet in an urban area or rural town that has no Wal Mart and limited other competition as those seem to be the only places they do very well.

Here's another thought: could the merger happen minus CA? How would that look? I also think OR/WA are a bigger problem from a competition elimination standpoint than CA but OR/WA seem to have gotten real quiet about the whole thing.

I'm also not sure you can call out Kroger for store closures in CA given the tract record of Albertsons (Lucky, Supervalu)... the only operator who hasn't done mass closures in CA is Safeway, but even Safeway has pockets of closures, like the Fresno Vons that have mostly closed, and a long tract record of closing stores in economically challenged neighborhoods.

[veteran+]

With some exceptions............................I do not think Ralphs has that "good reputation" any longer.

One thing they do have amongst regular Supermarkets is price.

[Bluelightspecial]

Just an observation, I'm sure it's just subjective...but when people talk about Southern Cal it really isn't one region....there are many regions in southern California. Unlike northern California where Safeway has had dominance, and put most of their money into over the decades at the deficit to other divisions, southern California is much more diverse. The inland empire is more price sensitive...Ralphs and Vons banners can't hold a candle to Stater's. Albertsons named stores do better there, but I don't think there would be much divestiture in that area except for maybe Palm Springs area. Ralph's used to be #1 in most of the San Fernando valley, but has been closing stores and is more dominant in the more affluent areas in the north and south. With the exception of a few random stores, most Albertsons bannered stores are gone from LA city, especially the west side. This is where divestitures between Ralphs/Vons/Pavilions bannered stores will be high...as well as coastal Orange County. However in many areas of north OC, South LA county, San Gabriel valley.... Ralphs and Albertsons/Vons have closed many stores already. I think if the merger were to go through Kroger would be smart to cherry pick some Albertsons/Vons/Pavilions locations like West Hollywood and Santa Monica and sell the rest. The prize on the west coast is NorCal and especially Hawaii. At one point the approximately 20+ Hawaii stores had higher volumes and profits than some entire mainland divisions.

There are still Safeway(Vons) stores in Fresno, but many of the closures of the Fresno stores happened prior to Safeway taking over Vons as well as after. I think there are 4 or 5 in the Fresno urban area still, not including Oakhurst. I don't understand why Albertsons doesn't rebrand these as Safeways, unless people still remember how bad the Safeways were that used to be there years ago. These closures also included many if not all of the central valley stores that used to be Safeways that Vons took over as well as Vons built stores. This includes Delano, Tulare, Shafter, Arvin, Visalia etc.



Here's another thought: could the merger happen minus CA? How would that look? I also think OR/WA are a bigger problem from a competition elimination standpoint than CA but OR/WA seem to have gotten real quiet about the whole thing.

I'm also not sure you can call out Kroger for store closures in CA given the tract record of Albertsons (Lucky, Supervalu)... the only operator who hasn't done mass closures in CA is Safeway, but even Safeway has pockets of closures, like the Fresno Vons that have mostly closed, and a long tract record of closing stores in economically challenged neighborhoods.

[HCal]

With some exceptions............................I do not think Ralphs has that "good reputation" any longer.

One thing they do have amongst regular Supermarkets is price.

I am fairly certain that Ralphs has higher sales per store than Vons or Albertsons in SoCal. On average, Ralphs tends to be more crowded than the competition. Stater Bros. is probably higher though.

Ralphs may have the lowest prices of the lot, but anyone in SoCal who is price-conscious has a plethora of discount grocers to choose from, so price isn't the draw it once was.

[storewanderer]

With some exceptions............................I do not think Ralphs has that "good reputation" any longer.

One thing they do have amongst regular Supermarkets is price.

I am fairly certain that Ralphs has higher sales per store than Vons or Albertsons in SoCal. On average, Ralphs tends to be more crowded than the competition. Stater Bros. is probably higher though.

Ralphs may have the lowest prices of the lot, but anyone in SoCal who is price-conscious has a plethora of discount grocers to choose from, so price isn't the draw it once was.

I have to defer to those of you in the market regarding the reputation of Ralphs. I've had some pretty negative experiences with Ralphs then I go to pockets like South Bay area where the stores seem very well run. My experiences in the past in NorCal with Ralphs were so overwhelmingly positive that my opinion may be skewed. This present Ralphs isn't really even the same store as what it was in NorCal.

This is my observation, what HCal says. Ralphs for decades had a ton of low volume stores but they've almost all closed. What is left seems to be very productive.

I think Vons was more productive through the 2010s but has really gone downhill in more recent years. They still have some good stores but also a lot of old 70s and 80s Era stinkers with falling apart Lifestyle interiors.

[veteran+]

With some exceptions............................I do not think Ralphs has that "good reputation" any longer.

One thing they do have amongst regular Supermarkets is price.

I am fairly certain that Ralphs has higher sales per store than Vons or Albertsons in SoCal. On average, Ralphs tends to be more crowded than the competition. Stater Bros. is probably higher though.

Ralphs may have the lowest prices of the lot, but anyone in SoCal who is price-conscious has a plethora of discount grocers to choose from, so price isn't the draw it once was.

I have to defer to those of you in the market regarding the reputation of Ralphs. I've had some pretty negative experiences with Ralphs then I go to pockets like South Bay area where the stores seem very well run. My experiences in the past in NorCal with Ralphs were so overwhelmingly positive that my opinion may be skewed. This present Ralphs isn't really even the same store as what it was in NorCal.

This is my observation, what HCal says. Ralphs for decades had a ton of low volume stores but they've almost all closed. What is left seems to be very productive.

I think Vons was more productive through the 2010s but has really gone downhill in more recent years. They still have some good stores but also a lot of old 70s and 80s Era stinkers with falling apart Lifestyle interiors.

Yep!

Westwood, La Jolla, Hillcrest and a few others are in great shape due to the Manager I believe.

But there are so many others (small & medium size) that are just wrong and not getting better. I think the reviewers on Yelp and Google are mostly accurate. Some of the main negatives are the snarky service, fresh and some disrepair-sanitation issues.