Posted on 10/25/2005 7:44:36 AM PDT by SmithL
Kroger Co.'s rumored plan to purchase Albertson's Inc. - combining the nation's two largest grocery chains - could create a chain large enough to compete and beat industry nemesis Wal-Mart Stores Inc.
Wal-Mart, a discounter, needed just 17 years to build 1,700 Wal-Mart Supercenter stores and become the country's largest seller of groceries. With more Supercenters on the way, traditional grocers such as Kroger have been looking for a way to keep their market share.
"Kroger, for many, many years, before Wal-Mart got in, was the No. 1 grocer in America," said George Whalin of Retail Management Consultants in San Marcos. "They're very good at what they do. They're formidable competitors."
Analysts say Kroger, with 2,525 stores, can hold its own, especially if it bulks up with 2,487 Albertson's stores. Cincinnati-based Kroger, which owns Ralphs Grocery Co., is the nation's biggest pure grocer - with a reputation for strong customer service, something that is a struggle for giant retailers such as Wal-Mart.
Officials with Kroger and Boise-based Albertson's declined to comment Monday on rumors of a bid reported by the Wall Street Journal and the New York Times to be about $10 billion plus the assumption of more than $6.5 billion in debt.
Investors embraced the proposed marriage as traders bid up shares in both companies. Albertson's shares rose $1.19, or 4.95 percent, to $25.25 on the New York Stock Exchange. Kroger shares rose 27 cents and closed at $20.07 on the New York Stock Exchange.
"A merger between Kroger and Albertson's would bump up competition, not only for Wal-Mart but for everybody in the industry," said Michael Banks, owner and partner of Las Vegas-based retail consultant Select Marketing LLC. "That's good for the business and good for customers."
(Excerpt) Read more at sacbee.com ...
Works for me!
I haven't been in an Albertson's in years but I like Kroger. They are clean and well stocked. You couldn't pay me to go to Wal-Mart.
Both are in Dallas. Wal-Mart has cleaned their clock in market share. As long as the other grocers have union issues, etc., they won't be able to compete. It is like fighting with one hand tied behind your back. For example, I can get a pound of meat or cheese at the Wal-Mart deli for roughly half the cost of the exact same brand at a Kroger, Albertson's or a Tom Thumb (owned by Safeway).
Are you kidding? Krogers is a lot more expensive.
If my local Kroger store was always well-stocked, I would never have driven all the way across to town to give the Wal-Mart food department a shot at my business. But alas, when you can't even be sure that your Kroger store is going to have heavy whipping cream, and Wal-mart always has it, then it's a waste of my time to shop Kroger.
I shop Marsh for fresh fruits, vegetables and meats. Wal-Mart gets all my packaged food and canned food business.
I do most of my shopping at Kroger's because the prices are usually comparable and they have a really great produce section.
One problem, though, is that you have to pay careful attention to expiration dates. They love to sell you expired food.
Kroger will have to get their affilitates in areas where they held a monopoly to stop price gouging if they want to keep Walmart's Supercenters at bay.
In the town where I live, until we got a Supercenter, the local Kroger affiliate (Kroger is called "Dillons" in Kansas) used to charge about 10% more for most items than stores in other nearby markets where there were multiple grocery chains.
They still haven't quite got it--although their prices moderated, Walmart still undercuts them on milk, breakfast cereal, lentils (as an Eastern Orthodox, this matters, we're more or less vegan about 180 days out of the year, though we love our lamb, beef and chicken the other 185), seafood (except jumbo shrimp), chicken, soda and snack-foods, except when Dillons' has a sale.
Kroger is going to have to lower their prices to compete. We have Aldis stores around here too. Ther are even cheaper.
We have Safeway markets up here but no Albertson's. The only times I have shopped in them is in Florida.
I used to shop at Kroger's and I miss them. I've never liked Albertsons, and won't miss them.
I rarely shop Wal-Mart, but they tend to keep other retailers honest, and I like that. I'm disgusted about all the political attacks on Wal-Mart from leftist politicians and their union masters. However, if another merchant want to take the battle to Wal-Mart on the battlefield of commerce, I'm all for it.
That's because Walmart buys all their meat from China, and everyone knows they use body parts from executed prisoners. Ok, I got that out of the way for the Anti-Walmart crowd :)
We have union grocers here who do quite well, but must keep control of benefit costs. Wal-mart doesn't offer the choice they do, nor the extensive high quality store brands. Other than soda and water, Sam's Choice is crap.
No Kroger's around here, but Albertson's closed down a couple of years ago. They were the highest price grocery store chain in town.
I have always heard that the grocery business is so cutthroat that they only make a very small profit. I don't believe it anymore. Wal-Mart is not just a few pennies lower in price. Their regular prices are very close to the sale specials at the other stores. Unless Wal-Mart is doing this as a loss-leader (which I don't believe for a minute), there is a lot more pad in grocery store pricing than we have been lead to believe.
Exactly. Plus, Kroger can't figure out how it wants to compete.
Do they do it through the traditional way, of offering big markdowns on different products every couple of weeks, or do they just cut the price of everything and try to compete across the board with Wal-Mart?
Upscale grocers like Central Market and Market Street are taking the high-end shopper who has plenty of discretionary income to spend on Kobe Beef and caviar.
So, Kroger will have to take on Wal-Mart for the mid and lower tier. Wal-Mart is woefully inadequate in its meat selections (no Angus beef,no veal), but far superior to Kroger, IMO, in produce.
But, since Kroger starts with a higher cost base, it will never be able to compete on price with Wal-Mart. Nor will Safeway or anybody else.
Kroger will do better when they dump the unions...
Yes they are, but OMG you have to bag your own groceries and pay a nickle for a paper bag and a dime for a plastic one and they are closed on Sundays.(/sarcasm)
Seriously though if you want cheap prices on the basics (milk, eggs, bread, produce etc. etc) Aldi's is the place to go.
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