Safeway sold for $9 billion, merges with Albertsons

[The Straight Story]

PLEASANTON -- Safeway and Albertsons announced on Thursday that the two supermarket chains will merge to create a massive nationwide grocery network that both companies hope will help them compete in a market they have been steadily losing to big-box retailers, convenience stores and niche grocers.

The merger comes as part of a $9 billion deal with Cerberus Capital Management, the New York private equity firm that owns Albertsons, and by the end of this year, will also own Safeway. Combined, the two supermarket companies will have about 2,400 stores, almost double the size of Safeway today, and just a slightly smaller footprint than rival Kroger's 2,641 stores. The deal marks ones of the largest supermarket buyouts and promises to further transform an industry that has been upended by an onslaught of competition.

Executives said on a call with media on Thursday that the additional stores and expanded products allow them to give consumers the choice they have come to expect in the modern grocery business.

"They way people have shopped for groceries has fundamentally changed," said Albertons Chief Executive Officer Bob Miller, who will become executive chairman of the new supermarket conglomerate. "As our customers need change, we have to adapt (to) a world where they have more options than ever."

http://www.mercurynews.com/business/ci_25289725/safeway-cerberus-reach-preliminary-deal-sell

[uppityperson]

1. Hey Albertson's CEO, what your customers need is decent food at an affordable price, not "change".

So, less competition will bring more "options" and choices? Huh.

Call me a cynic.

[NV Whino]

2. My heart bleeds

help them compete in a market they have been steadily losing to big-box retailers, convenience stores and niche grocers.

Translate that as Costco, Trader Joes and local markets.

[jmowreader]

21. Also Walmart and Kroger

[NYC_SKP]

23. Walmart and now Target stores have large food sections. nt

[Stinky The Clown]

24. WalMart

WalMart's prices are dramatically lower than Safeway's. What's even worse, their selection is better. The giant down side is the universal "I hate my job" attitude of their employees.

[GP6971]

3. I'm sure this will go well......not

Supervalu bought Albertsons and 6 years later sold them off. What I heard was that there were a lot of distribution problems.....trying to merge different systems. The brick and mortar stores weren't the issue....it was distribution followed by private label issues.

Bottom line is I think this sucks.

[davidpdx]

30. I hadn't heard about the Supervalu/Albertson's merger

I've been outside the US for the last 10 years. I find studying the retail industry interesting having worked in it for so long before coming here.

I can see how merging systems would be a headache. When they put together these mergers, I think too often they come up with numbers that are wildly optimistic and then the problems start and that's where things fall apart.

[bluestate10]

4. Won't work if they keep selling shit at dear prices.

Consumers are looking for nutritious food at fair prices, a mega-Safeway/Albertson doesn't offer that and will continue to fail.

[Jenoch]

5. I wonder what is going to happen in markets

where Safeway and Albertson's are across the street from one another? I imagine underperforming stores will either be sold or closed.

The only time I have ever shopped at these stores has been when visiting my father in Arizona. The grocery business there seems to be quite competitive.

[davidpdx]

31. Good point

I know in Oregon there are a lot of locations that are fairly close to each other. Think of how many stores they are going to close. That is a whole bunch of people that are going to get pick slips. Another blow to the economy.

[Proud Public Servant]

6. Good luck, Albertsons workers

Hope you fare better than Safeways last victims, the Dominick's workers in Chicago.

[abbeyco]

7. This cannot end well

in Denver, Safeway is about as high on prices as Albertson's, but lower in service - in my opinion. I hate Safeway and only shop Albertson's for their AWESOME deli fried chicken, kick-ass meat counter and great seafood deals during the holidays.

Not sure how I feel about this merger but it won't drive me to Trader Joe's who recently came to Denver and was totally shitty and nasty in their hiring for 3 new stores; I won't shop 'em ever again.

[Timez Squarez]

10. Wow. You were treated poorly in the interview process?

They set it up as impromptu interviews at the Hilton Garden Inn - found the same lady who interviewed my wife in the TJ store the other day, and she was very rude too.

But the food is good and close to my house. Yeah, we've got PARKING issues over there....

[reddread]

13. Traitor Joes firing looooong term older employees, cutting health care risks and payouts.

scum. I hope all of their employees know what they are working for.
I feel sorry for them.
Know who and what you are giving your money and support to.

[abbeyco]

26. I didn't apply at TJs but had friends who did

And they weren't given the time of day - even with previous grocery retail experience. While I've enjoyed shopping TJs in CA, I'm done with 'em - if they can't treat people right, they don't deserve my dollar. I'll fill my shopping basket at Sprouts and upcoming summer farmer's markets and be happy that I have choices...and hopefully get deli fried chicken at Albertsons!

[The Second Stone]

8. Safeway should go out of business

for the really poor customer service they have in making sure customers stand in long lines. Every time I go into my local Safeway the lines are irritatingly long, not the same at Raley's.

[flying rabbit]

11. I have noticed that the long line thing

is ever present in the Safeways around here.( Portland Or)

[Nolimit]

16. No Kidding!

The Safeway by the Lloyd Center has eight checkout stands but I almost never see them fill half of them, even when it's busy.

[flying rabbit]

19. They seem to rely on the self check out model at the ones I go to.

Which is okay if I have just a few items. But forget it if I have a lot of stuff. Plus the bags(plastic and paper) they have fall apart 56% easier than other chains. So I guess their policies lead to less big purchases on my part. Bean Counters.

[Nolimit]

22. This one doesn't even have self-checkout.

I sometimes just go to the in-store Starbucks to checkout if I have a just a few things. If they won't use it they should remove some of the stands and put something else in.

[flying rabbit]

25. I didn't think that one did

I wasn't sure though. The only game in the area if you are on foot. There is a TJs and FM if you have a car. Bean Counters.

[Mosby]

18. I don't wait long in Safeway

It's faster than Frys and Bashas by a mile.

[Tommy_Carcetti]

33. In my hometown, initially Safeway was the go-to store for years.

Then they opened up a Giant down the street which put Safeway to shame, and Giant became the go-to store for everyone in town.

Then Giant got bought up by some super-conglomeration, and since that the quality of Giant began to slowly decrease. Meanwhile, they did a really nice renovation of the Safeway and when it re-opened, it was far nicer than what Giant had become.

Not sure of what the perceived hierarchy in my hometown is now, since I'm no longer living there. But when Albertson's was in Florida (they've since pulled out), they typically had decent quality, but were still perceived as also-rans to Publix.

[demwing]

38. Albertson's is still in Florida

2 stores in St. Petersburg/Clearwater area where I live...

[Tommy_Carcetti]

39. Didn't know that. Thought they had left totally.

They closed all the ones in South Florida, including by my house. And they closed the one by my parents' in Gainesville.

[LiberalEsto]

9. I've only been in a Safeway twice in my life

and it wasn't worth the bother of getting out of the car. Meh.

[Paulie]

12. after Safeway killed Dominick's

Now it merges with the owner of Jewel. After Jewel bought the top 11 Dominick's stores.

Fishy.

[kysrsoze]

28. Well, it's now no wonder why Safeway closed all the Dominick's locations

... not that they didn't completely suck ass. I was glad Jewel and Mariano's took over... Whole Paycheck, not so much. Albertson's seems like a complete ripoff based on my recent trip to L.A., but strangely, Jewel is more or less reasonable for a lot of items. Much as I love Mariano's (who incidentally started Dominick's), Jewel stores are unionized so I make a point of shopping there... at least for now. Not sure how things will eventually look.

From my POV, how wasn't this some kind of gigantic insider trading scam? It's all WAY too incestuous.

[Armstead]

14. We Never Learn

The endless march to consolidate the economy into the grasp of a few mega corporations has been going on for over 30 years -- it's screwed up our economy and the very foundation of democracy.

And still we sit back and let it happen.
What a stupid fucking country.

And those who might say "this is necessary because of changing times" and the need to compete, I say Bullshit. That's the same line that has been used to justify every one of these goddamn mergers.

[dixiegrrrrl]

15. Kudos to you for seeing the key issue..

Which is that Cerebus owns 2 major grocery chains on the West Coast.

So what is it going to look like when 4 companies own 98% of the retail grocery market?
Will prices go up or down with less competition...mmmmm?

yeah, we know the answer, sadly.

[Armstead]

17. Thanks. Unfortunately it's been a key issue in many sectors for decades

But when it comes to this we're a nation of moronic zombies who don't get it....It should be a no-brainer for Democratic Liberals....Even grass-roots conservatives, who supposedly claim to be in favor of "free enterprise" should recognize the dangers of handing the entire economy over to a few mega corporations nd allowing them to kill off true competition.

But noooooo....

[davidpdx]

29. I think the consolidation is just going to be used to further cut employee benefits

and make the work environment worse for them. It just wouldn't surprise me the least if they try to squash the unions.

[Armstead]

34. ...as well as putting the screws to their customers and suplliers

This whole ongoing mergermania is at the root of many of the economic and social problems we have today.

[davidpdx]

40. Ah, very true

They will force suppliers to meet their needs by lowering costs, which will in turn hurt the suppliers and their employees. A very ugly situation.

[Matariki]

20. Or they could just stop making people give personal info to get 'sale' prices

That's why I stopped shopping at Safeway. To hell with those stupid 'club cards' that are just a means of getting (and no doubt selling) personal info.

I stopped shopping at Albertsons because of the big sign in the front of the store advertising that they drug test their employees. I don't shop at places that dehumanize their employees.

[subterranean]

27. I don't see how this will give consumers more choice.

Both stores sell pretty much the same things, mostly processed junk.

[Niceguy1]

32. this could be a good thing

Safeway aka Vons offers high quality produce, deli, bakery and an excellent cheese section. Hopefully fhey will upgrade the Albertsons store and offer those services.

[Armstead]

35. It's never a good thing to eliminate competition that way

If a business wants to grow, why not do it honestly by improving their customer services on their own?

[surrealAmerican]

36. Didn't we used to have anti-trust laws in this country?

Why have we given up on the concept?


I guess now I'll just have to wait for them to close all the Jewel stores too.

[enid602]

37. Safeway

Albertson's was operating under bankruptcy protection when its stores were divied up between 3 suitors. Cerberus bought one of the groups of stores, and later bought up the other two groups, along with Shaws, Jewell and other stores. The result is that they have a rather large group of stores without a cohesive headquarters/back office operation. Safeway has that. Also, Safeway has very strong in-store brands, something the others lack. In 2013, 29% of Safeway's sales were in-store brands. The profit margin on in-store brands is huge, whereas grocers only make 5 cents on the dollar on national brands. This merger should give Safeway an additional distribution network for its in-store brands. Safeway's in-store labels are head and shoulders above Kroger, WalMart, Target, etc.