Nearly two years after proposing their $25 billion merger, Kroger and Albertsons have revealed the locations of 579 stores, including nearly 70 in the Seattle area, that will be sold if the deal goes through.
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 grocer’s stores in the state.
The stripped-down locations would be owned and operated by New Hampshire-based C&S Wholesale Grocers, which in theory would preserve competition in dozens of local markets where Kroger and Albertsons now compete.
But from the start, that plan raised concerns that the stripped-down locations would end up being significantly altered or even closed under C&S, despite assurances from Kroger and Albertsons.
Among the Washington locations to be awarded: 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 stripped stores.
A complete list can be found online.
Tuesday’s announcement appears to be an effort by Kroger and Albertsons to calm concerns that a merger would result in higher prices for consumers.
It comes just weeks before a federal court in Oregon will consider a government request to halt the merger while federal regulators examine it for possible antitrust violations. But the release of the list is likely to raise concerns among buyers whose stores will be sold to C & S.
Critics of the merger, including regulators in Washington, Colorado and the Federal Trade Commission, who have all sued to block the merger, contend that C&S does not have the retail expertise or capacity to effectively operate the stores, which which may eventually result in closure.
Consumers’ first question will be, “will my neighborhood store stay open?” said Jeff Green, a retail analyst at Hoffman Strategy Group, who follows the grocery sector. “The second is, what about the prices?”
Kroger and Albertsons have said the merger will mean lower grocery prices in part because the combined company would have the scale to compete with giants like Walmart and Costco. The two grocery giants have also promised that no locations will close as a result of the merger.
A C&S spokesman rejected suggestions that the deal would hurt workers, noting that C&S would bring in “hundreds of highly skilled grocery retail veterans” from Kroger and Albertsons and has ample experience in the business.
Asked if it had ruled out closing stores, the company did not offer a definitive no. He insisted its newly expanded capabilities will “undoubtedly ensure these stores continue to successfully serve their communities for many generations to come.”
Tuesday’s announcement was met with skepticism even by some workers at the stores on the sales list.
C&S has promised to honor existing union contracts for workers at the distributed 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 previous assurances from Kroger and Albertsons that no locations would close 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 when they met with C&S in January to discuss the merger, C&S refused to uphold the earlier promise from Kroger and Albertsons that no locations would close as a result of the merger, UFCW 3000 spokesman Tom Geiger said.
Kroger, Albertsons and C&S Wholesale had not responded Tuesday afternoon to questions about the sales list or related matters.
The proposed merger has been a flashpoint in Washington, which has an unusually large number of Kroger and Albertsons stores — about 329 total, or about 10% of all Albertsons locations and 4% of all Kroger locations — and it would also see the largest number of bare locations of any state.
On January 15, Washington Attorney General Bob Ferguson filed the first government lawsuit seeking to block the merger on the grounds that it violates state antitrust laws and would result in higher food prices. On April 26, a King County superior court rejected efforts by Kroger and Albertsons to dismiss the lawsuit, which is scheduled to go to trial on September 16.
On February 26, the Federal Trade Commission filed its lawsuit seeking to block the merger, citing similar concerns.
For all the shock that resulted from Tuesday’s list, it may be controversial.
On August 26, the FTC will ask a federal court in Oregon to temporarily halt the merger, albeit a preliminary injunction, until the federal regulator can complete a full review of the merger.
Some experts believe that if the court approves the order, Kroger and Albertsons could abandon the deal rather than wait for the FTC’s review, which begins this month and could last several months.
This is a developing story. Check back for updates.