🛒 Kroger-Albertsons Merger: Southwest & Hawai'i Impact

[submariner]

A place to discuss the impact of the Kroger-Albertsons merger, specifically on the southwest & Hawai'i regions.

[retailfanmitchell019]

I don't think that Arizona is as big of a deal as the PNW is though. They have legitimate competition in the market including urban areas; there really isn't anything conventional in the PNW on a large basis. Does the competition execute well? Not really (Bashas) but they could if they were better operated and that isn't the job of the government to manage their business. They have Walmart all over the place too. The PNW is really ACI or KR only for all intents and purposes, with limited Walmart presence in the urban areas. As far as Tucson goes, Walmart could fix that issue in a six month long remodel campaign just like they did in SoCal where so many regular stores had their assortments "compressed" to add in full grocery (even though some had it cut back later, such as Tustin which lost its deli and bakery for more backroom storage).

This also probably should be moved to the regional discussion instead of national.

Even though AZ is a strong state for Walmart, there’s a reason they are weaker in Tucson: in 1999, the Tucson City Council passed a law limiting the grocery sections of stores larger than 100k sqft (preventing Walmart from building Supercenters over 100k sqft within the city limits). Older Division 1 Walmarts within Tucson have been grandfathered into the law and expanded into Supercenters. Most Walmarts in Tucson are Neighborhood Markets, and most Supercenters in the Tucson area are in the Pima County suburbs.

This law also explains why there are only two Fry’s Marketplace stores in Pima County (Marana and Sahuarita).

[storewanderer]

I don't think that Arizona is as big of a deal as the PNW is though. They have legitimate competition in the market including urban areas; there really isn't anything conventional in the PNW on a large basis. Does the competition execute well? Not really (Bashas) but they could if they were better operated and that isn't the job of the government to manage their business. They have Walmart all over the place too. The PNW is really ACI or KR only for all intents and purposes, with limited Walmart presence in the urban areas. As far as Tucson goes, Walmart could fix that issue in a six month long remodel campaign just like they did in SoCal where so many regular stores had their assortments "compressed" to add in full grocery (even though some had it cut back later, such as Tustin which lost its deli and bakery for more backroom storage).

This also probably should be moved to the regional discussion instead of national.

Even though AZ is a strong state for Walmart, there’s a reason they are weaker in Tucson: in 1999, the Tucson City Council passed a law limiting the grocery sections of stores larger than 100k sqft (preventing Walmart from building Supercenters over 100k sqft within the city limits). Older Division 1 Walmarts within Tucson have been grandfathered into the law and expanded into Supercenters. Most Walmarts in Tucson are Neighborhood Markets, and most Supercenters in the Tucson area are in the Pima County suburbs.

This law also explains why there are only two Fry’s Marketplace stores in Pima County (Marana and Sahuarita).

Tucson is a little strange in how it is laid out, spread out in some parts, etc. Density is very low around the edges. There was a Super Kmart there (expansion of an older Kmart).

There is a third Frys Marketplace but it is/was labeled as a Frys Signature. Not sure what it is labeled as now. It opened around 2005.

[pseudo3d]

It looks like Kroger has already closed its Austin facility, Google reports the warehouse as closed and delivery is no longer available to even downtown Austin.

So if any merger happens only Randalls delivery will be available.

[storewanderer]

It looks like Kroger has already closed its Austin facility, Google reports the warehouse as closed and delivery is no longer available to even downtown Austin.

So if any merger happens only Randalls delivery will be available.

Can we tell if any other of the facilities have closed? I think Austin was not an actual automated fulfillment center with the robotic technology but rather a drop off point where they took assembled orders and just divided them up into delivery vehicles?

I looked into the FL facilities and all appear to be open. I looked at OKC facility and it too is still open.

I am not surprised to see this money pit not working. Recall my thoughts on this before COVID... extremely negative outlook. Then COVID came and they appeared like genius for getting into this program... so I backed off on my outlook... jury is still out but even closing one facility is something. Austin is not the hot spot economically it once was, real estate market there is plunging, I think it had the highest value drop of any US Market in 2023, this Kroger situation could be a one off but to close in Austin... sort of throws cold water on the viability of the entire concept.

[pseudo3d]

It looks like Kroger has already closed its Austin facility, Google reports the warehouse as closed and delivery is no longer available to even downtown Austin.

So if any merger happens only Randalls delivery will be available.

Can we tell if any other of the facilities have closed? I think Austin was not an actual automated fulfillment center with the robotic technology but rather a drop off point where they took assembled orders and just divided them up into delivery vehicles?

I looked into the FL facilities and all appear to be open. I looked at OKC facility and it too is still open.

I am not surprised to see this money pit not working. Recall my thoughts on this before COVID... extremely negative outlook. Then COVID came and they appeared like genius for getting into this program... so I backed off on my outlook... jury is still out but even closing one facility is something. Austin is not the hot spot economically it once was, real estate market there is plunging, I think it had the highest value drop of any US Market in 2023, this Kroger situation could be a one off but to close in Austin... sort of throws cold water on the viability of the entire concept.

I know I saw a Kroger delivery vehicle in my neighborhood in 2023, so it definitely operated.

As for OKC and Florida, I can't say how long they have left, but either way, they aren't in areas where they could get brick and mortar stores. I'm not sure that's relevant, but might be.

[storewanderer]

I know I saw a Kroger delivery vehicle in my neighborhood in 2023, so it definitely operated.

As for OKC and Florida, I can't say how long they have left, but either way, they aren't in areas where they could get brick and mortar stores. I'm not sure that's relevant, but might be.

It definitely operated, they held a quasi grand opening for it and I assume did some localized marketing.

I wonder what happened for them to give up so quickly on it...

Would the Kroger banner do better in Austin than Randalls though? I don't think they are the right stores or the right locations for Kroger to be successful. Maybe there are enough CA transplants in Austin who are used to Safeway to keep Randalls going once they figure out it is like a carbon copy of a CA Safeway.

[pseudo3d]

Would the Kroger banner do better in Austin than Randalls though? I don't think they are the right stores or the right locations for Kroger to be successful.

Won't happen. Kroger likely uses union contracts, so any potential boosts in traffic is going to be curtailed by costs of unionizing and lowered costs. With the closure of both the MoPac and Research Blvd. stores, the average size of an Austin Randalls has to be pretty close to 35k-40k square foot at most.

That is, if the merger goes through, which is unlikely to happen.

[johnintx]

I know I saw a Kroger delivery vehicle in my neighborhood in 2023, so it definitely operated.

As for OKC and Florida, I can't say how long they have left, but either way, they aren't in areas where they could get brick and mortar stores. I'm not sure that's relevant, but might be.

When I was in OKC last year, Kroger was advertising on TV and on billboards for delivery. I even saw one of their delivery vehicles in a bedroom community 30 miles from OKC proper. I'm not sure if they're still operating there.

Kroger has never had brick and mortar stores there. The only familiarity with the brand would be for people that moved from Texas or another place where Kroger operates. I can't see this venture being successful as a grocery delivery operation started from the ground up.

[BillyGr]

Kroger has never had brick and mortar stores there. The only familiarity with the brand would be for people that moved from Texas or another place where Kroger operates. I can't see this venture being successful as a grocery delivery operation started from the ground up.

Though, that really isn't much, if any different from other grocery delivery groups (something like Instacart would be a good example) that were just started as a delivery service and have no background as a supermarket.

The minor difference being that some people may have at least heard the name Kroger before, even if they never saw their stores.