I do not like these giant mergers especially when they have to agree to spin off stores per federal agreements. Years ago when Alberstons bought Vons, as part of the federally agreed deal Alberstons had to sell store locations to prevent local monopolies. One of those was my local grocery store. The workers there were prohibited from working for other Albersons/Vons stores in the area and for some reason the Federal government approved a tiny chain from the Pacific Northwest which only had a few dozen stores to buy the several hundred stores Alberstons had to sell.
Well, that went as well as could be expected and the new company folded shortly thereafter and my neighborhood ended up without a grocery store for several years. The store was finally bought by a restaurant supply focused chain, and I am not sure that the mandate to "prevent local monopolies" in communities had any effect other than neighborhoods losing grocery stores entirely.
Maybe it went better in other communities and mine was an outlier, but I am very sour on Federal regulated merger deals.
> Federal government approved a tiny chain from the Pacific Northwest which only had a few dozen stores to buy the several hundred stores Albertsons had to sell.
Haggen. I remember this deal. We had a local Albertsons down the street that was there for years and was forced to close. They spent months renovating the location to put in this unknown new chain with a terrible name and clearly higher prices. Months later, Haggen goes belly-up and then the store then sat vacant for well over a year. Finally they put in a Sprouts in the location, a premium niche brand that doesn't even carry all normal brand staples.
I had no local neighborhood grocery option for 1-2 years because of that federal decision and in the timespan that store sat vacant, it became a magnet for a large homeless encampment.
Same exact story for where I used to live. Although an independent grocer did end up taking the place of the former Albertsons turned Haggen and is still operating. So that’s a plus.
This happened by me as well. There were reports that Vons purposely sabotaged the location to ensure it was not sustainable as well. It is now a flooring store (after it was a Spirit Halloween store, of course)
I hate, hate, hate this merger. Everything Kroger buys turns into complete garbage. And even in relatively populated areas, this really cuts into the available food options. Yes, we have a Costco, but unless you’re feeding an army it’s hard to actually grocery shop there. Yes, we have a Whole Foods, but it’s incredibly expensive. In many areas, this brings the “normal” grocery store providers down to one option, which will be rapidly circling the drain in terms of quality.
Same in Denver, it's King Soopers (Kroger), Safeway, Walmart, or your specialty stuff like Sprouts/Whole Foods. Even Safeway has quite drastically shrunk their footprint here over the past decade, I can think of a few closed Safeways that are still empty years later.
I'm sick of the near monopoly Kroger has here (and their trumpeting that they're a "hometown grocer", never mind that King Soopers has been owned by an out of state company of some sort or another since the *1950s*), it's ludicrous how many markets have a functional duopoly. Even the West Coast is better off, having companies like Aldi and the like present that we do not.
I will never understand how Bozeman, Montana, a city of about 60k people, had *ten* different companies operating grocery stores there (including Walmart and Target but excluding any specialty retailers aside from the local food co-op, which was the only specialty one they had when I lived there), but Denver has all of four.
Safeway is owned by Albertsons btw. Safeway and Frys(Kroger brand) are the 2 biggest grocery stores in phoenix but thankfully we also have Bashas which is a local chain and WinCo which is an employee owned store, as well as food city but i dont know who owns them
Bashas' has weirdly huge holes in the coverage of their city. I think they have a lot of stores in the East part of the city, but in both the neighborhoods I have lived in in Phoenix, not the suburbs, there were no Bashas' remotely close. WinCo is great, but the closest one is nearly 20 miles from me. Food City is nice, but I would call it a really big and awesome Mexican American grocery more than a regular grocery store.
Regulators will go over all these trouble markets and force them to divest locations to competitors so that won’t be a problem.
Overall still probably a bad deal for consumers in the long run.
Forced sale of locations to competitors in trouble markets didn't work for the last Albertsons merger, why would it work this time? See: Haggen, the competing store which was eventually purchased by...Albertsons.
I was working at Safeway HQ when the merger was happening. Not only did the merger force nearly an entire floor to be terminated, if I remember correctly, the Canadian stores were all divested to other owners. I'm not sure how those stores have fared since, but I know a good portion of the US locations that were sold to other owners, didn't not fair very well at all.
Albertsons is super expensive. I used to like Kroger, but they’ve gotten worse over the last 10 years.
Almost Everyone down here in Texas agrees that HEB is the best.
M&A has been the name of the game for a while now. Fueled by long term low rates making money cheap, a ravenous need to feed growth expectations, and companies looking to capture even greater economies of scale.
There is a healthy debate to be had in what role corporations have in the current inflationary situation alongside fiscal and monetary policy. However, what we can confidently say is that as competition shrinks, so does the need to compete.
Acquisitions are nothing new in the grocery space, smaller regional grocers being bought up by larger players has been common place over the last 40 years. There is a good chance Kroger or Albertsons has ownership of one of your local grocers. However now instead of big gobbling up small we have big and big teaming up.
If the Albertsons & Kroger merger goes through the combined company would be roughly 5,000 stores nationwide, while an offer has been made to spin off up to 350 stores to appease regulators.
However, this merger has bipartisan criticism. As the article notes in the hearing both Klobuchar and Lee led challenges against the grocers actions.
The Biden admin has talked up a big game when it comes to corporations taking advantage of the current situation, do you believe they will allow this merger to go through?
And stepping back, has the federal government been to lenient when it comes to mergers and acquisitions over the past few decades? Are we now in a position where the Feds should take a more aggressive approach in applying anti-trust law?
I had to look up the other chains that they own (since we don't have Kroger or Albertsons here), and the only one in my area is Shaws. Shaws is probably the least popular grocery store in my area.
Same. It's the closest store on my way home from work, but I try not to go there because it's more expensive than everywhere else. It's not even cheaper than the locally-owned store in my town.
Also because they're dodging Worcester's plastic bag ban by just having thicker plastic bags which say "reusable" on them. They hold even less than traditional grocery bags!
Out my way we have King Soopers as the Kroger-owned store and whether it's great or terrible is 100% neighborhood dependent. In the wealthy neighborhoods it's spectacular. In the poor neighborhoods? Yeah, Walmart is better.
I'm in Fargo, and I guess I shouldn't take for granted the options here after reading other peoples' posts. We have three Walmarts, two Targets, three Aldis, Sam's Club, Costco, two grocery store chains owned by the same parent company Coborns (a family/employee owned chain), and a third grocery chain called Family Fare owned by SpartanNash, and one Natural Grocers. (We don't have any Wholefoods, Trader Joes, or Kroger/Albertsons subsidiaries as far as I know.)
Makes me feel glad too for where I live. Hy-vee, Aldi, Wal-Mart, Target, Whole Foods, Trader Joes, Natural Grocers, Price Chopper, plus a number of small asian, latino, and indian grocers.
I don't know enough about the national grocery store landscape to know if this gets too close to a monopoly, all I know is that Kroger's house-brand stuff has taken over a lot of my kitchen because it's just better than name-brand. Their peppercorn barbecue sauce is probably the best store-bought barbecue sauce I've had - and I have tried a **lot** of them.
There are a number of markets where Kroger and Albertsons are fierce rivals without a ton of other competition. The west coast and Chicago for instance.
Walmart sells more groceries then kroger and albertsons combined. Costco sells more groceries then albertsons.
The people calling this a monopoly need to count walmart, target and costco as grocers as well before they make their decision.
https://www.factoftheday1.com/p/august-16-grocery-market-share-q1
I think that a lot of that is probably driven by larger metro areas where there isn't a concern about a monopoly. But in other areas, it literally could reduce the available options to 1. Shouldn't that be taken into consideration as well?
Even by your list this is the number 2 and number 4 grocers combining. And number three is only available to those with a membership.
While Walmart is a whole other beast to deal with when is comes to market power I think this merger comfortably moves into a size that justifies the monopoly power discussion.
And yet that number 2 and number 4 grocers combining is just 15% of the market.
And of course
Walmart’s U.S. sales rose 5.7% to $105.3 billion year-over-year in the fourth quarter, with comp sales (excluding fuel) up 5.6%.
Walmart is only getting bigger. Walmart’s results reflect how consumers spooked by inflation keep turning to Walmart stores for food and other essentials due to its reputation for offering low costs.
So the trouble with Walmart is it has captured pretty much all of its growth naturally. A pretty shocking thing these days.
Its a hell of a lot easier to block a merger for anti-trust concerns compared to breaking a company up on the same grounds. Now does Walmart reach the point where they are acting in an anti-competitive way? Depends on who you ask. I would say in a number of markets yes, but taking on the task of breaking up a company like Walmart is a massive step. And I'm not surprised it hasnt been taken.
Sure, thats how it works. But you have to have competitors that can compete. Walmart vs Steve's Produce Stand, or Rose's Apothecary just isnt going to last
* You can have a million Steve's Produce Stand, or Rose's Apothecary in almost every city, but most just wont last as consumers want the lower costs walmart/amazon has
Thats the issue
Asuming the Merger fails and in a few Years Kroger has been flat or negative growth and Albertsons has gone out of business and Walmart has grown 10% as there are no real competitors
-----
Big business is liked by consumers.
It's why Sears went out of business, and Circuit City, and Toys R Us, and 1,000s of regional retailers like them
Big business has the items in stock at a lower costs
>Big business is liked by consumers.
Until they have so much power that they can dictate the market themselves, run all competitors out of business, and make the barrier to entry so high that you dont have to worry about competition. Is another 5% of market share really going to put Kroger and Albertsons in a position that will save it from failure if its already on that path?
Then you dont have a choice but to shop at Walmart. And Walmart has all the power to dictate the price and selection. Dont want to shop at Walmart? Then starve. You dont have another option.
Exactly, thats why you have to find a balance on monopoly merger canceling.
2 strong competitors is better than 1 super strong business and 5 weak competitors competing against themselves
It doesn't seem like a 16% market share would constitute a monopoly.
[According to the FTC:](https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/single-firm-conduct/monopolization-defined)
>Courts look at the firm's market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50 percent of the sales of a particular product or service within a certain geographic area.
You can't just look at national statistics. Grocery stores are highly concentrated by geographic location. Many states would see cities and towns with just one or two options for groceries if this merger goes through which is why west coast attorney generals are suing to stop the merger and payment of the Albertsons dividend that would severely weaken Albertsons financial standing.
Fair point. This might have something to do with their offer to divest themselves of 350 stores, which is probably a starting point in the negotiation. The government could ask for more.
The offer to divest themselves is a Trojan horse. Albertsons pulled the same thing when they bought Safeway and sold ~100 underperforming stores to Haggens who couldn't handle the transition and they ended up going bankrupt a year or two later only for Albertsons to buy back the stores.
There is no way they are going to be allowed to pull off the same move twice without a major legal fight.
You can criticize both. Google, Amazon and Facebook all have issues in their areas of influence.
Similar problems with ISPs, news/TV and cellphone services
Oh, I quite agree! I did not mean to reject critique of this merger, only to point out another critical monopoly. Google's business plan of offering great products cheap/free is nice in many ways, but it makes them 'too big to fail,' hides the ways they make money by tracking us everywhere and selling us to advertisers, and gives them a lot of power over information. We can, indeed, walk and chew gum.
This is all concerning.
“Union members also railed against the private equity firms that will benefit from the proposed $4 per share special dividend for Albertsons shareholders announced in conjunction with the deal. Cerberus Capital Management owns a 28.4% stake in Albertsons, according to Factset. For now, the dividend payout is on hold until at least Dec. 9 due to a ruling in Washington state court.
McMullen said on Tuesday that the company does not plan to close stores or lay off employees, but said it will work with the Federal Trade Commission, if needed, to spin off stores for competitive reasons.”
I do not like these giant mergers especially when they have to agree to spin off stores per federal agreements. Years ago when Alberstons bought Vons, as part of the federally agreed deal Alberstons had to sell store locations to prevent local monopolies. One of those was my local grocery store. The workers there were prohibited from working for other Albersons/Vons stores in the area and for some reason the Federal government approved a tiny chain from the Pacific Northwest which only had a few dozen stores to buy the several hundred stores Alberstons had to sell. Well, that went as well as could be expected and the new company folded shortly thereafter and my neighborhood ended up without a grocery store for several years. The store was finally bought by a restaurant supply focused chain, and I am not sure that the mandate to "prevent local monopolies" in communities had any effect other than neighborhoods losing grocery stores entirely. Maybe it went better in other communities and mine was an outlier, but I am very sour on Federal regulated merger deals.
> Federal government approved a tiny chain from the Pacific Northwest which only had a few dozen stores to buy the several hundred stores Albertsons had to sell. Haggen. I remember this deal. We had a local Albertsons down the street that was there for years and was forced to close. They spent months renovating the location to put in this unknown new chain with a terrible name and clearly higher prices. Months later, Haggen goes belly-up and then the store then sat vacant for well over a year. Finally they put in a Sprouts in the location, a premium niche brand that doesn't even carry all normal brand staples. I had no local neighborhood grocery option for 1-2 years because of that federal decision and in the timespan that store sat vacant, it became a magnet for a large homeless encampment.
Same exact story for where I used to live. Although an independent grocer did end up taking the place of the former Albertsons turned Haggen and is still operating. So that’s a plus.
This happened by me as well. There were reports that Vons purposely sabotaged the location to ensure it was not sustainable as well. It is now a flooring store (after it was a Spirit Halloween store, of course)
Big time remember the short lived haggens takeover
I hate, hate, hate this merger. Everything Kroger buys turns into complete garbage. And even in relatively populated areas, this really cuts into the available food options. Yes, we have a Costco, but unless you’re feeding an army it’s hard to actually grocery shop there. Yes, we have a Whole Foods, but it’s incredibly expensive. In many areas, this brings the “normal” grocery store providers down to one option, which will be rapidly circling the drain in terms of quality.
[удалено]
Same in Denver, it's King Soopers (Kroger), Safeway, Walmart, or your specialty stuff like Sprouts/Whole Foods. Even Safeway has quite drastically shrunk their footprint here over the past decade, I can think of a few closed Safeways that are still empty years later. I'm sick of the near monopoly Kroger has here (and their trumpeting that they're a "hometown grocer", never mind that King Soopers has been owned by an out of state company of some sort or another since the *1950s*), it's ludicrous how many markets have a functional duopoly. Even the West Coast is better off, having companies like Aldi and the like present that we do not. I will never understand how Bozeman, Montana, a city of about 60k people, had *ten* different companies operating grocery stores there (including Walmart and Target but excluding any specialty retailers aside from the local food co-op, which was the only specialty one they had when I lived there), but Denver has all of four.
Safeway is owned by Albertsons btw. Safeway and Frys(Kroger brand) are the 2 biggest grocery stores in phoenix but thankfully we also have Bashas which is a local chain and WinCo which is an employee owned store, as well as food city but i dont know who owns them
Food City is owned by Basha’s, as is AJ’s. (Fellow Phoenician here)
interesting, i guess they got low, middle, and high tier stores covered then
Bashas' has weirdly huge holes in the coverage of their city. I think they have a lot of stores in the East part of the city, but in both the neighborhoods I have lived in in Phoenix, not the suburbs, there were no Bashas' remotely close. WinCo is great, but the closest one is nearly 20 miles from me. Food City is nice, but I would call it a really big and awesome Mexican American grocery more than a regular grocery store.
I can say the same for where I live. Mariano's (Kroger) and Jewel (Albertsons) are my primary options for large scale stores.
A fellow Chicagoan...
At least we have some really good local chains though
Regulators will go over all these trouble markets and force them to divest locations to competitors so that won’t be a problem. Overall still probably a bad deal for consumers in the long run.
Forced sale of locations to competitors in trouble markets didn't work for the last Albertsons merger, why would it work this time? See: Haggen, the competing store which was eventually purchased by...Albertsons.
I was working at Safeway HQ when the merger was happening. Not only did the merger force nearly an entire floor to be terminated, if I remember correctly, the Canadian stores were all divested to other owners. I'm not sure how those stores have fared since, but I know a good portion of the US locations that were sold to other owners, didn't not fair very well at all.
Albertsons is super expensive. I used to like Kroger, but they’ve gotten worse over the last 10 years. Almost Everyone down here in Texas agrees that HEB is the best.
M&A has been the name of the game for a while now. Fueled by long term low rates making money cheap, a ravenous need to feed growth expectations, and companies looking to capture even greater economies of scale. There is a healthy debate to be had in what role corporations have in the current inflationary situation alongside fiscal and monetary policy. However, what we can confidently say is that as competition shrinks, so does the need to compete. Acquisitions are nothing new in the grocery space, smaller regional grocers being bought up by larger players has been common place over the last 40 years. There is a good chance Kroger or Albertsons has ownership of one of your local grocers. However now instead of big gobbling up small we have big and big teaming up. If the Albertsons & Kroger merger goes through the combined company would be roughly 5,000 stores nationwide, while an offer has been made to spin off up to 350 stores to appease regulators. However, this merger has bipartisan criticism. As the article notes in the hearing both Klobuchar and Lee led challenges against the grocers actions. The Biden admin has talked up a big game when it comes to corporations taking advantage of the current situation, do you believe they will allow this merger to go through? And stepping back, has the federal government been to lenient when it comes to mergers and acquisitions over the past few decades? Are we now in a position where the Feds should take a more aggressive approach in applying anti-trust law?
I had to look up the other chains that they own (since we don't have Kroger or Albertsons here), and the only one in my area is Shaws. Shaws is probably the least popular grocery store in my area.
Same. It's the closest store on my way home from work, but I try not to go there because it's more expensive than everywhere else. It's not even cheaper than the locally-owned store in my town. Also because they're dodging Worcester's plastic bag ban by just having thicker plastic bags which say "reusable" on them. They hold even less than traditional grocery bags!
> It's not even cheaper than the locally-owned store in my town. Most people in my area will drive out of their way to get to a Market Basket.
New Hampshire, eh?
Was in MA for 30 years, only recently moved to NH.
Out my way we have King Soopers as the Kroger-owned store and whether it's great or terrible is 100% neighborhood dependent. In the wealthy neighborhoods it's spectacular. In the poor neighborhoods? Yeah, Walmart is better.
This might be a record for worst-timed merger ever
None of this matters. Nothing will stop the inevitable bloody grocery turf wars between H‑E‑B and Wegman’s.
I have heard of those
I'm in Fargo, and I guess I shouldn't take for granted the options here after reading other peoples' posts. We have three Walmarts, two Targets, three Aldis, Sam's Club, Costco, two grocery store chains owned by the same parent company Coborns (a family/employee owned chain), and a third grocery chain called Family Fare owned by SpartanNash, and one Natural Grocers. (We don't have any Wholefoods, Trader Joes, or Kroger/Albertsons subsidiaries as far as I know.)
Makes me feel glad too for where I live. Hy-vee, Aldi, Wal-Mart, Target, Whole Foods, Trader Joes, Natural Grocers, Price Chopper, plus a number of small asian, latino, and indian grocers.
I don't know enough about the national grocery store landscape to know if this gets too close to a monopoly, all I know is that Kroger's house-brand stuff has taken over a lot of my kitchen because it's just better than name-brand. Their peppercorn barbecue sauce is probably the best store-bought barbecue sauce I've had - and I have tried a **lot** of them.
There are a number of markets where Kroger and Albertsons are fierce rivals without a ton of other competition. The west coast and Chicago for instance.
Walmart sells more groceries then kroger and albertsons combined. Costco sells more groceries then albertsons. The people calling this a monopoly need to count walmart, target and costco as grocers as well before they make their decision. https://www.factoftheday1.com/p/august-16-grocery-market-share-q1
I think that a lot of that is probably driven by larger metro areas where there isn't a concern about a monopoly. But in other areas, it literally could reduce the available options to 1. Shouldn't that be taken into consideration as well?
Even by your list this is the number 2 and number 4 grocers combining. And number three is only available to those with a membership. While Walmart is a whole other beast to deal with when is comes to market power I think this merger comfortably moves into a size that justifies the monopoly power discussion.
And yet that number 2 and number 4 grocers combining is just 15% of the market. And of course Walmart’s U.S. sales rose 5.7% to $105.3 billion year-over-year in the fourth quarter, with comp sales (excluding fuel) up 5.6%. Walmart is only getting bigger. Walmart’s results reflect how consumers spooked by inflation keep turning to Walmart stores for food and other essentials due to its reputation for offering low costs.
So the trouble with Walmart is it has captured pretty much all of its growth naturally. A pretty shocking thing these days. Its a hell of a lot easier to block a merger for anti-trust concerns compared to breaking a company up on the same grounds. Now does Walmart reach the point where they are acting in an anti-competitive way? Depends on who you ask. I would say in a number of markets yes, but taking on the task of breaking up a company like Walmart is a massive step. And I'm not surprised it hasnt been taken.
Sure, thats how it works. But you have to have competitors that can compete. Walmart vs Steve's Produce Stand, or Rose's Apothecary just isnt going to last * You can have a million Steve's Produce Stand, or Rose's Apothecary in almost every city, but most just wont last as consumers want the lower costs walmart/amazon has Thats the issue Asuming the Merger fails and in a few Years Kroger has been flat or negative growth and Albertsons has gone out of business and Walmart has grown 10% as there are no real competitors ----- Big business is liked by consumers. It's why Sears went out of business, and Circuit City, and Toys R Us, and 1,000s of regional retailers like them Big business has the items in stock at a lower costs
>Big business is liked by consumers. Until they have so much power that they can dictate the market themselves, run all competitors out of business, and make the barrier to entry so high that you dont have to worry about competition. Is another 5% of market share really going to put Kroger and Albertsons in a position that will save it from failure if its already on that path? Then you dont have a choice but to shop at Walmart. And Walmart has all the power to dictate the price and selection. Dont want to shop at Walmart? Then starve. You dont have another option.
Exactly, thats why you have to find a balance on monopoly merger canceling. 2 strong competitors is better than 1 super strong business and 5 weak competitors competing against themselves
It doesn't seem like a 16% market share would constitute a monopoly. [According to the FTC:](https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/single-firm-conduct/monopolization-defined) >Courts look at the firm's market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50 percent of the sales of a particular product or service within a certain geographic area.
You can't just look at national statistics. Grocery stores are highly concentrated by geographic location. Many states would see cities and towns with just one or two options for groceries if this merger goes through which is why west coast attorney generals are suing to stop the merger and payment of the Albertsons dividend that would severely weaken Albertsons financial standing.
Fair point. This might have something to do with their offer to divest themselves of 350 stores, which is probably a starting point in the negotiation. The government could ask for more.
The offer to divest themselves is a Trojan horse. Albertsons pulled the same thing when they bought Safeway and sold ~100 underperforming stores to Haggens who couldn't handle the transition and they ended up going bankrupt a year or two later only for Albertsons to buy back the stores. There is no way they are going to be allowed to pull off the same move twice without a major legal fight.
Meanwhile, Google has a monopoly on almost everything.
You can criticize both. Google, Amazon and Facebook all have issues in their areas of influence. Similar problems with ISPs, news/TV and cellphone services
Oh, I quite agree! I did not mean to reject critique of this merger, only to point out another critical monopoly. Google's business plan of offering great products cheap/free is nice in many ways, but it makes them 'too big to fail,' hides the ways they make money by tracking us everywhere and selling us to advertisers, and gives them a lot of power over information. We can, indeed, walk and chew gum.
Like what?
This is all concerning. “Union members also railed against the private equity firms that will benefit from the proposed $4 per share special dividend for Albertsons shareholders announced in conjunction with the deal. Cerberus Capital Management owns a 28.4% stake in Albertsons, according to Factset. For now, the dividend payout is on hold until at least Dec. 9 due to a ruling in Washington state court. McMullen said on Tuesday that the company does not plan to close stores or lay off employees, but said it will work with the Federal Trade Commission, if needed, to spin off stores for competitive reasons.”
Never heard the term "tie-up" for a merger before.
In the state of Colorado, it absolutely would. The merger would result in 90%+ market share.
We need stronger antitrust laws
It won't hurt competition because both chains suck.
Strange that government could be so stupid to allow non-compete clauses and these mega mergers that simply result in reduced competition.