Monday – Let’s Go Shopping
While I was soaking up the Arizona sunshine earlier this month for nearly a week, the news came over the ticker that two of the nation’s leading grocery chains, Safeway (#2) and Albertson’s (#3), want to merge their companies. Kroger is the largest chain, a title they have held off and on for many decades.
Safeway, which has been in business for a century, is still a public stockholder corporation in the traditional style whereas Albertson’s is owned outright by a private equity firm called Cereberus. Technically, Cereberus proposes to buyout the Safeway chain from its stockholders and merge it into the Albertson’s organization.
Safeway is an old, well established brand that is know nationwide because they have been literally everywhere at one time or another. But the folks in the Eastern half of the country have never heard of Albertson’s, the Idaho-based chain that expanded and grew primarily by buying out several smaller, local chains during the 1960’s to 1990’s. They in turn were purchased by Cereberus in 2006.
Competing by buy-outs has left both chains heavily in debt and their proposal for rescue next has to be approved by Safeway’s shareholders and the Federal Trade Commission, both expected by the end of April. But for an outsider looking in like me, things don’t look so rosy. First of all, if the merger is approved, then there will be a flurry of store closings in areas where both brands are located close to each other and cannot support two stores. That’s lots of people being laid off and a lot of empty store space dropping off the real estate tax base.
Secondly, these private equity firms operate not by best serving their customers but by best serving their immediate profit and loss reports. As such, they tend to cut expenses that often are cuts in service and convenience as well. I think you know what I mean there.
If and when the merger is completed, the new chain (probably called Albertson’s) will retain the #2 spot with about 2,400 locations, still second to Kroger’s 2,600 locations.
One thing that the grocery trade industry is seemingly trying to keep under wraps is the real leader in grocery sales ….. Walmart. Over the past ten years Walmart has been actively expanding their existing department stores to include full-service groceries and now have more than 4,000 locations that sell groceries. In effect, they have the country’s largest grocery chain in terms of numbers of locations as well as dollar sales. More than half of Walmart’s sales receipts chain-wide are from grocery sales.
When I was a kid, the country’s largest grocery chain was A & P. Where are they today?
Never mind. Where we are today is in the apparatus bay where we need to start getting the equipment checked out. Monday – long checklist day, so let’s go while I get more coffee started in the Bunn-O-Matic. See you back in the day room in a little while. Then we can decide where we’ll get our dinner groceries for today.
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