Nearly two years after proposing their $25 billion merger, Kroger and Albertsons have disclosed the locations of the 579 stores, including nearly 70 in the Seattle area, to be sold off if the deal is approved.
The list, released Tuesday, includes 124 Washington state locations of Kroger, which owns QFC and Fred Meyer, and Albertsons, which owns Safeway and Haggen. That would be nearly 40% of the two grocery retailers’ stores in the state. Safeway stores in Centralia and Chehalis were not on the list of locations to be sold off.
The divested locations would be owned and operated by New Hampshire-based C&S Wholesale Grocers, which in theory would preserve competition in the dozens of local markets where Kroger and Albertsons now compete.
But from the start, that plan raised concerns that divested locations would end up being significantly changed or even shut down under C&S, despite assurances from Kroger and Albertsons.
Among the Washington locations to be divested: 13 QFC stores and three Safeway stores in Seattle; five QFC stores in Bellevue; two QFC stores and three Safeway stores in Tacoma; two Safeway stores and two QFC stores in Kirkland; and three QFC stores and one Safeway store in Redmond. No Fred Meyer locations appear to be on the list of divested stores.
A complete list can be found online.
Tuesday’s announcement appears to be an effort by Kroger and Albertsons to assuage concerns that a merger would result in higher prices for consumers.
It comes just weeks before a federal court in Oregon considers a government request to pause the merger while federal regulators scrutinize it for possible antitrust violations. But releasing the list is also likely to raise concerns among shoppers whose stores would be sold to C & S.
Critics of the merger, including regulators in Washington, Colorado and at the Federal Trade Commission, which have all sued to block the merger, claim C&S lacks the retail expertise or capacity to effectively operate the stores, which could ultimately result in closures.
Consumers’ first question will be, “is my neighborhood store going to remain open?” said Jeff Green, a retail analyst with Hoffman Strategy Group who follows the grocery sector. “Second is, what happens with prices?”
Kroger and Albertsons have said the merger will mean lower grocery prices in part because the merged company would have the scale to compete with giants like Walmart and Costco. The two grocery giants have also promised that no locations would be closed as a result of the merger.
A C&S spokesperson pushed back on suggestions that deal would harm workers, noting that C&S would be bringing on “hundreds of highly skilled grocery retail veterans” from Kroger and Albertsons and has ample business experience of its own.
Asked if it had ruled out store closures, the company didn’t offer an unequivocal no. It insisted its newly expanded capabilities that “will undoubtedly ensure that these stores continue to successfully serve their communities for many generations to come.”
Tuesday’s announcement was also being greeted with skepticism by some workers at stores on the divestiture list.
C&S has promised to honor existing union contracts for workers at divested stores. But some workers fear C&S will push for lower wages in future contracts with union officials representing workers.
They also worry that C&S may choose to close some locations, despite earlier assurances from Kroger and Albertsons that no locations would be closed as a result of the merger.
“Who knows if (C&S is) just feeling like, ‘Oh, well, these stores, they’re not making enough money, we’re going to close them all,’” said Brendan Gallagher, a meat cutter at the QFC store on Mercer Street near Seattle’s Space Needle.
“So then that’s like hundreds of people out of work, or having to go to different stores,” added Gallagher, who is a member of United Food & Commercial Workers Local 3000.
UFCW officials said that when they met with C&S in January to discuss the merger, C&S refused to affirm the earlier promise by Kroger and Albertsons that no locations would close as a result of the merger, said UFCW 3000 spokesperson Tom Geiger.
Kroger, Albertsons and C&S Wholesale had not responded Tuesday afternoon to questions about the divestiture list or related matters.
The proposed merger has been a flashpoint in Washington, which has an unusually large number of Kroger and Albertsons stores — around 329 in all, or around 10% of all Albertsons locations and 4% of all Kroger locations — and would also see the largest number of divested locations of any state.
On Jan. 15, Washington Attorney General Bob Ferguson filed the first government lawsuit seeking to block the merger on grounds that it violated state antitrust laws and would result in higher grocery prices. On April 26, a King County Superior Court rejected efforts by Kroger and Albertsons to dismiss the suit, which is scheduled to go to trial Sept. 16.
On Feb. 26, the Federal Trade Commission filed its own lawsuit seeking to the block the merger, citing similar concerns.
For all the consternation that resulted from Tuesday’s list, it may be moot.
On Aug. 26, the FTC will ask a federal court in Oregon to temporarily halt the merger, though a preliminary injunction, until the federal regulator can complete a full review of the merger.
Some experts think that if the court grants the injunction, Kroger and Albertsons might abandon the deal rather than wait for the FTC’s review, which starts this month and could last many months.
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