41 ms·

The smash and grab of Kroger-Albertsons

269 points by connor11528 4y ago

honestlyGr8t 4y ago
superkuh 4y ago
See also, grocery corporation CEOs bragging about price gouging under the cover of "inflation" during investor calls, https://pluralistic.net/2022/10/17/united-states-vs-vons/#pricing-power https://pluralistic.net/2022/10/17/united-states-vs-vons/#pr... >As Kroger CEO told his shareholders: "a little bit of inflation is always good in our business" because it lets him raise prices and "customers don’t overly react." etc, etc.
- sokoloff 4y ago
  A little bit of stable inflation is good for almost every business. Massive inflation shocks are bad for lots of people and businesses.
  - bombcar 4y ago
    And the CEO isn't wrong - customers are used to gas prices flailing all over the place, but they notice food price changes, and so things "build up" over time and when the dam finally breaks, it breaks hard. Arizona Iced Tea started at 99 cents in 1997 - today that should be $1.83 but it's still 99 cents. Same with Costco's hot dog and chicken (though they've done some noticeable changes on the hot dog). When the dam breaks, it's not going to go up 10%, it's going to skyrocket to try to make up for lost time.
    - lotsofpulp 4y ago
      Those are not good examples. One is sugar water with extremely high profit margins, and the other is likely sold as a loss leader or at most, at cost. Food prices have been changing for a long time, but only if you pay attention to quantity and ingredients. With gas prices, the unit quantity or ingredient cannot change, so the change is obvious. Same with things like milk and eggs and vegetables though, which do change often. With processed food, the seller has much more ability to maneuver around having to increase price.
      - bombcar 4y ago
        Yeah - my point was that once prices start going up noticeably, all the other processed food manufacturers will increase their prices, also (often with a "return to what the original size was" along with it).
      - ch4s3 4y ago
        [*edit] I probably shouldn't have weighed in on this.
        lotsofpulp 4y ago
        Is this at the retail level? At the producer level, profit margins seem quite decent: https://www.investopedia.com/ask/answers/071015/what-profit-margin-usual-company-food-and-beverage-sector.asp https://www.investopedia.com/ask/answers/071015/what-profit-... Logically, if the same quantity of Arizona Ice Tea retails for the same price as it did 25 years ago, then someone in the supply chain is or was making huge profit margins, considering the increase in materials and transport costs.
        deleted 4y ago
        [deleted]
    - Firmwarrior 4y ago
      Adding onto this a little: I was shocked at how volatile some food prices are, and how much some have gone up recently https://www.fao.org/worldfoodsituation/foodpricesindex/en/ https://www.fao.org/worldfoodsituation/foodpricesindex/en/ Depending on how you set your endpoints, you can basically come up with any number for inflation you want, from 1.7% to 20+% I guess this is all well-understood and taken care of under the hood by processed food companies, though, since the Big Mac Index has pretty steadily held to an inflation level near the CPI
      - jacobr1 4y ago
        The big mac index tracks labor costs as much if not more-so than wholesale food prices.
        lupire 4y ago
        Price of anything can be reduced to labor, energy, and scarcity as, you move up the supply chain.
    - datavirtue 4y ago
      It's because the consumer literally has to buy hundreds of things. Tinkering with a penny turns into a dollar real quick.
      - lupire 4y ago
        That's not how it works. It's percentage changes that are significant.
        datavirtue 4y ago
        Every thing in my cart increases by a penny. It (the cart, my food) now costs $2 more. Easy math. Change that to percentages and amount increases, of course. They do play with pennies. I worked in a huge national restaurant chain as a teenager and went through numerous menu updates. They were always flipping nickels and pennies all over the place on the menu. As a kid I thought changing the menu prices by five cents was ridiculous. Apparently, that's how it works in this business with razor thin margins.
  - adamsmith143 4y ago
    There's a reason why corporate profits are at all time highs. they're just pushing any inflation related costs and more directly to consumers and scraping even more profit off the top. This is actually just not even controversial, completely supported by data. https://fred.stlouisfed.org/series/CP https://fred.stlouisfed.org/series/CP
    - themitigating 4y ago
      I can't believe you're being downvoted
    - hellojesus 4y ago
      That may be the case, but that should allow a new competitor to come in and offer lower priced goods.
      - metadat 4y ago
        Yeah, starting a new local grocer or even national grocery chain is pretty easy, right? Why don't you lead the charge.
        hellojesus 4y ago
        Because I have no incentive to do so? I could, certainly, but until this deal proves rotten there is no impetus for action.
    - coldcode 4y ago
      If they were at all time highs the stock market would not be done so much.
      - fzeroracer 4y ago
        The stock market hasn't been connected to reality for years. Companies which produce nothing and are deep in debt have high stock value purely on basis of speculation. Most companies that report layoffs, tough times etc also report record levels of profit because it's not enough to be profitable, you have to go well above and beyond profit. You have to squeeze out everything even at the cost of short term stability.
- collegeburner 4y ago
  absolutely how "price gouging" has gone from meaning "charging $100 for a case of water during a hurricane" to "adding a 15% markup to some groceries".
  - geraldyo 4y ago
    Both are examples of price gouging... ?
    - happyopossum 4y ago
      No, price gouging is actually a thing which means a thing - it's not a term you can just apply to whatever you want. Most states define it as charging inflated prices during a crisis or emergency, not simply raising prices beyond what geraldyo thinks is reasonable.
      - replygirl 4y ago
        If some term has different meanings in different legal contexts, and you believe that having a meaning in a legal context precludes having a distinct colloquial meaning, how can you tell GP they're using the wrong meaning before you've asked where they're posting from? Wikipedia: "Price gouging occurs when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair."
        collegeburner 4y ago
        it never had that meaning. it's a concerted effort by democrat politicians and media: they say "price gouging" because that's something most people agree is wrong when it's actually normal economic behavior in response to both parties' really stupid economic policies. they're doing this because they want more control of pricing and that's how they're going to lie their way into it and spread disinformation about what's happening. edit: updating with proof, Texas state definition is "selling or leasing fuel, food, medicine, or another necessity at an exorbitant or excess price, or demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine or another necessity."
- PragmaticPulp 4y ago
  To put this in context: Grocery starts famously have razor-thin margins because the business is so competitive. Kroger's most recent reported net profit margin was 1.7% with gross margins (e.g. before company expenses) in the 22% range. Compare that to the SaaS companies, where many of us collect our paychecks, that can have gross margins in the 60-90% range. If you want to call companies out for price gouging and excessive profit margins, taking Kroger to task for a 1.7% net margin seems kind of silly. Especially when most of us engineers are collecting paychecks from companies with far, far higher margins than that.
  - dan_quixote 4y ago
    There's nothing wrong with a healthy profit margin, per se. The potential problem here is that we have a de facto monopoly in many regions which controls access to FOOD.
    - noasaservice 4y ago
      If it gets too bad, that's how you end up with riots, local politicians dead, buildings torched, etc. Food riots are not something you fuck with.... If history has anything to say about that. I don't think we've seen that scope here in the US... Yet. But given the number of guns, "it's a when, not an if" if the politicians allow extreme food scarcity to happen in a wide area.
      - themitigating 4y ago
        Politicians allow? Not the business? The calls for government regulation by the same gun toteing people who constantly complain about big government is so confusing.
      - datavirtue 4y ago
        My senical take on food stamps has been one of politicians feeding the poor to prevent reality. In the US you are talking about 40+MM people who cannot afford to feed themselves. If half of them missed a few meals all of our other problems would disappear under the ensuing sea of shit.
jaywalk 4y ago
The fact that Albertsons is going to be liquidated to essentially force the issue is scummy beyond belief. Private equity is out of control.
- stjohnswarts 4y ago
  Exaclty, it decreases competition, decreases the number of stores, increases prices, etc. Why have regulators if they won't kill these megadeals that really only help the corps involved and harm the public interest everywhere else.
- lotsofpulp 4y ago
  This is not private equity. Kroger is a publicly listed company, and so is Albertsons. I suspect the reason for this is Albertsons is facing heavy competition from other grocery stores, their financials look terrible. A lot of established grocery stores are getting upended at the lower end by Aldi/Lidl/Walmart/Target/Costco, and at the higher end by Whole Foods/Trader Joes/etc. Kind of reflects income/wealth gap trends. You are either selling at the lowest prices, or you are selling at higher prices to a niche population on the rich side of town. Edit: ignore this comment, I had wrong information.
  - addragyn 4y ago
    Most certainly is private equity. Didn’t read the article? The 4b special dividend that will be issued will go to two PE firms. According to the author’s analysis this will strip out the working capital and enrich the PE participants. Likely sending the company and by extension the workers to the debt markets. I didn’t read the financials but if true this is just shithead financial engineering. :(
    - lotsofpulp 4y ago
      I was wrong to write that the deal is not private equity, it is setup by private equity firms, but it is up to all the other investors to see if they want to go ahead with the deal, hence the need for a shareholder vote. I do not see how the special dividend can legally go to two firms. It would have to go to all shareholders. Cerebrus does own 150M/475M shares = 30% of Albertsons, but for some reason, I do not see Apollo in the list of top shareholders. https://finance.yahoo.com/quote/ACI/holders/ https://finance.yahoo.com/quote/ACI/holders/ But their press release from May 2020 says they bought 17.5% of Albertsons: https://www.apollo.com/media/press-releases/2020/05-20-2020-140452880 https://www.apollo.com/media/press-releases/2020/05-20-2020-...
whartung 4y ago
I heard about this the other day. I can't express how much I dread it. Folks get invested in their local grocery stores, we do at least. And we were neck deep in the last merger with Safeway, since it destroyed the store that we went to. Albertsons bought Safeway, but as part of the deal, they had to sell off some of the stores (which made sense, our store, Vons, was right across the street from the local Albertsons store). Somehow, Hagans (a small northwest chain) got roped in to sell the extra stores too. Hagans "overnight" grew from, like, 12 stores to over 200. Shockingly, the transition did not go well, there were cries of shenanigans, and Albertsons ended up buying all of the stores back. Some of the local stores that closed due to the merger reopened, other's didn't. Our store never reopened. In over 8 years, that space and sat empty in the downtown area. My mustache twisting cynicism tells me that Albertsons is keeping the lease on that space, and keeping it empty, to prevent an Aldi from renting it out and setting up shop right across the street. Didn't help, turns out one is moving in down the street after renovating a closed hardware store. Maybe they'll give the space up now. That merger was a mess, caused a lot of disruption, cost a bunch of jobs. We shop at Albertsons, there's a Ralphs (Kroger) closer, but we like Albertsons better. With 3 years of COVID induced "new normal", I'm not looking forward to the collateral damage from a merger like this.
- UncleOxidant 4y ago
  We had Hagens around here too. They closed down and most of the sites have been empty for years. There was a Safeway not too far away that closed down several years back (maybe part of that merger agreement) that's been empty for years... now I see an Albertsons is moving in there. The main 2 chains in our area are Fred Meyer (Krogers), Safeway & Albertsons (both really Albertsons) so this merger will mean that all those stores are now really owned by the same corporation.
- deleted 4y ago
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- deeblering4 4y ago
  I'm quite thrilled to see low price groceries like Aldi come in and take business away from these bloated supermarket chains. After making the switch it's hard to shop at a typical grocery store. Everything is ridiculously marked up and the floor plan is ridiculously sprawling.
Panino 4y ago
> Kroger/Albertsons would... own and operate brands such as Safeway, Ralphs, Smith’s, Harris Teeter, Dillons, Fred Meyer, Vons, Kings, Haggen, Tom Thumb, Star Market, Jewel-Osco, and Shaw’s. The illusion of competition. Then within that single company posing as many are found food products sold by a handful of megacompanies like Kraft, Nestle and General Mills, each posing as a multitude of companies "competing" with one another. For this and other reasons, it's best to cook and eat whole foods (onions, sweet potatoes, etc.) instead of consuming foodlike products that were manufactured.
- mikestew 4y ago
  In the PNW, I don't think it even creates the illusion. What grocery stores are left that wouldn't be under that umbrella? In Redmond, WA, the only ones that come to mind are Trader Joe's, PCC, and Whole Foods. One could probably shop at PCC and get everything one needs for food. Whole Foods, sure, but it's pricey and now you're dealing with just another giant corporation trying to eat the world. But it is starting to look like there's going to be Kroger and Publix (if you live far enough south). Meanwhile our government agencies are over there playing with their fiddles.
  - xxpor 4y ago
    In the Seattle area, Town & Country markets are nice, but expensive. PCC may work for some folks, but they don't carry some fairly basic things like... Coke. (also crazy expensive).
  - __derek__ 4y ago
    Your list is missing Grocery Outlet, Target Grocery, Costco, and the smattering of Asian grocers. You could probably also add Amazon Fresh delivery. But, yes: nobody in our area is under the illusion that Fred Meyer and QFC (or Safeway and Albertsons) compete with each other.
    - mimikatz 4y ago
      Also the largest which is Wal-Mart, I assume they sell food in the PNC
mimikatz 4y ago
I swear people look at this these mergers the wrong way. The people who get squeezed are less likely to be the consumers and more likely to be the producers.
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- jmole 4y ago
  It's both? This is America, where muscular middlemen squeeze out the middle class so that capital flows to the top. Margin for producers? Not gonna happen. And for consumers? raise prices and lower portion sizes until profits start to decline. Rent-seeking is the American dream
  - lotsofpulp 4y ago
    > Rent-seeking is the American dream I assume it is everyone’s dream.
    - skinnymuch 4y ago
      Don’t think it was Marx’s or MLK’s or Malcolm X’s dream (I don’t mean the white washed MLK, etc)
    - r00fus 4y ago
      If you are 100% self-interested, sure. Most people have a moderate amount of empathy, so it's not their "dream".
      - lotsofpulp 4y ago
        It would be interesting to find someone that turns down a $10M trust fund that yields $200k+ passive income. In either case, there might be some people that would eschew that, but I doubt the population of people that would accept (or dream about it) it is restricted to “Americans”.
gwbrooks 4y ago
The combined firm, post-merger, would have 15% of the U.S. grocery market. Walmart has ~18%. It's OK to dislike the deal because you see a beloved brand being absorbed. It's even OK to dislike the deal because you hate private equity. But aggregating up to a 15% market share doesn't look like a monopoly concern to me.
- nightfly 4y ago
  Nation wide it might be only 15% but in a town it might mean that all (or at least all non-outlet) grocery stores are now owned by one company
  - themadturk 4y ago
    In my city we have two Safeways, a Fred Meyer (Kroger), a QFC (Kroger) a Walmart Supercenter, a WinCo, a couple of other smaller grocers, and Costco. Before the Albertsons-Safeway merger we used to have a couple of Albertsons, and even a Haggen. Those are all gone now, not replaced by anything. There's another couple Safeways not far out of town, and another Fred Meyer as well. With this kind of geography, we're likely to lose at least one Safeway (it's literally across the street from Freddy's), and possibly one or another of those not-too-far-away Freddy's and Safeways. It's not exactly going to create a food desert, but real choice will go way down. I already split my shopping between Fred Meyer and Walmart, mostly because of supply concerns between the two.
  - gwbrooks 4y ago
    Agreed. But the policy horse is already out of the barn on that dynamic. See also: Independent bookstores, small/regional general stores, farming, water and electric utilities in many markets, etc.
  - loeg 4y ago
    Yeah, including towns like Seattle. Kroger + Albertsons are probably 70% of the market here.
- clairity 4y ago
  "monopoly" is a red herring here. if they were under 10%, you might have a case (though there are many factors besides market share that need to be considered, like supplier power). the issue that we the people, and by extension our antitrust regulators, care about is market distortion, and 15% is well within the range at which a competitor can unduly distort a market in their favor by sheer size alone. markets exist for the benefit of society as a whole, not just giant corporations.
nerpderp82 4y ago
If this goes through, we might as well disband the FTC.
- muststopmyths 4y ago
  >Amusingly, the law firm representing Kroger is Arnold & Porter, whose antitrust practice is headed by Debbie Feinstein, the Obama era FTC Bureau of Competition Director who actually approved the Albertsons/Safeway merger and its laughably stupid remedy. I bet it does go through
  - KerrAvon 4y ago
    Not necessarily. Biden's head of the FTC is strikingly unsympathetic to big mergers and other large business shenanigans. Obama's presidency was awful. Every promise to the center/left broken, and a huge, continuous giveaway to the right, who repaid him by slapping him in the face. He implemented Romney's healthcare plan. He kept the bankers out of jail / gallows after the 2008 crisis -- "Too big to fail". (The bankers repaid Obama's kindness by heavily funding the GOP.) He kept us in Afghanistan. And Republicans hated him for giving them everything they wanted. So frustrating to watch.
pphysch 4y ago
My closest Kroger-owned outlet has a "cheap" feel but many prices are actually much, much higher than the nearby Trader Joe's. More on par with Whole Foods. An insidious conglomerate.
- lotsofpulp 4y ago
  Some grocery stores like Aldi and Lidl and Winco and Costco and Walmart have a strategy of pricing low all the time (e.g. everything at ~115% of their cost to source it). Some, like Kroger and Albertsons, price some things low and some things high, betting that people coming into the store for a lower priced product will pay more for the convenience of not having to go to another store. And this is frequently accomplished by giving out coupons (e.g. some things are losing them money, some are at cost, some are at 100% profit margin).
  - rhino369 4y ago
    When I worked at an Albertson's subsidiary store, there was a bunch of stuff that was "on sale" 3 out of every 4 weeks, but the "sale" price was the real price and you'd just get ripped off the 4th week.
    - lotsofpulp 4y ago
      The crazy part is a good portion of the population prefers feeling like they got a deal because something is “on sale” rather than just paying a lower non sale price. See JC Penney’s disastrous experiment with removing sales/coupons and just offering low prices.
      - Mountain_Skies 4y ago
        Harbor Freight is going through a variation of this now. They used to be famous for their coupons that were so easy to obtain that the shelf price might as well have been the coupon price. Changing over to just having the shelf price be the true price has been poorly received by a good chunk of regular shoppers there, even though what they really did was get rid of the ceremonial dead chicken waiving of using coupons. Haven't checked recently but I think they've started reintroducing coupons because people loved feeling like they were getting a special deal even if they weren't.
unethical_ban 4y ago
This only solidified my position that market capitalism is more dangerous than worker owned corporations by far. When 50,000 people own all portions of the economy, every unnecessary white collar worker “optimized” out of a job, every blue collar worker replaced by robotics, where is our society?
- skinnymuch 4y ago
  > This only solidified my position that market capitalism is more dangerous than worker owned corporations by far. Belated Welcome! We need more people like you
- addragyn 4y ago
  This is not “market capitalism”. This is anti competitive behavior, perpetuated by Wall Street that is enabled by the tax code. Independent / other grocers can’t compete because the fundamentals of the business have nothing to do with the game being played.
  - unethical_ban 4y ago
    Eh, I mean, I still think some kind of "market-based" capital system is reasonable - I don't want government-orchestrated markets for all goods and services, but clearly our society has not done enough to regulate the immoral extremes of free markets.
    - throwawaymaths 4y ago
      The state and its policy encourage free markets to be immoral because they fetishize "growth" as a metric. I'm not saying growth is bad, but morally speaking, it should be consisered at best neutral. A growth-agnostic capitalist system would be interesting.
      - unethical_ban 4y ago
        Agreed. Our society should be measured in the happiness and health/living security of its citizens, and by technological advancement. The acquisition of wealth can be a means to that end, not the end itself.
doodlebugging 4y ago
Maybe if they keep consolidating all the grocery suppliers they will reach a point where their pricing ability locks out the poorest people and rich people finally make it onto the menu.
- adrr 4y ago
  Still have Walmart, and target. Also Amazon has moved in with steep discounting. There’s also the discount grocery stores like Trader Joe’s.
flerchin 4y ago
How can the "special dividend" that cripples the company be good for the company, or shareholders. That alone ought to be illegal, the merger is just window dressing.
- quantified 4y ago
  It's typical for PE to pay themselves well. The next step is to load the vehicle up with debt and shop it out. If it tanks (Toys R Us etc.) then no biggie for the PE's partners, they didn't shop there anyway.
prpl 4y ago
Combined, my family has easily more than 60 years at Smith's over 3 generations dating back to the 70s - my dad had more than 40 alone before they canned him. It is not an understatement to say I grew up in a grocery store. Kroger has been a bit more ruthless in the last 5 years, and basically pulled an IBM in late 2019: https://www.cnbc.com/2019/10/02/kroger-to-lay-off-hundreds-amid-questions-about-its-turnaound-plan.html https://www.cnbc.com/2019/10/02/kroger-to-lay-off-hundreds-a... They called it "middle management" in press release but they fired tons of senior people in the stores that had been around a long time (anyone over 50 who'd been at the company more than 25 years was a good candidate). In any case - management at a grocery store might as well be a blue collar job in comparison to most any other white collar job. The severance package was decent - most got 9 months pay. Still, getting canned in your 50s from one of the only jobs you've ever known isn't pleasant, but it didn't surprise me. Management at the established grocery businesses. There was a lot of talk about The Bear in the restaurant industry - the grocery industry at the departmental management level and above is similar, albeit usually less ruthless and a lot more petty. Everyone gets written up a lot and their jobs hung over their head often. I think it's probably gotten a bit better in the last decade though, partially as some of the old people have started to be replaced with college grads I suppose. As for Safeway, I've been in the bay area since 2010 and I can't really say I'd shed a tear to see Safeway under different management. I remember my introduction to Safeway when I went to buy eggs and bacon and was shocked to see it at $7/package in 2010. I settled for the Jimmy Dean sausage at the time, because it was on sale. This simple introduction holds true -most Safeway prices are out of line with a reasonable price _unless_ things are on sale. That was not something that was true at Smith's, or Winco, or even Raley's (Nob Hill Foods) in general. Safeway even took over Andronico's in the bay area and _raised_ prices even more - while reducing the product quality and selection. Compared to Whole Foods, prices are actually competitive on a day-to-day basis. The best thing Safeway has going for itself at this point is that is that it's ubiquitous and it usually has self-checkout lanes (which is the only way to get in and out of a store in a reasonable amount of time anymore). To sum it up - I think Kroger is on a path to trying to turn more profit at the expense of workers and consumers alike, but I don't think Safeway can get much worse either. It's going to be shit all the way down, you just hope it's not the super smelly kind.
- 4y ago
acomjean 4y ago
In Massachusetts we have a private grocery store chain called "Market Basket". Its cheaper than the rest and spreading. (After the 2 realtive that owned it had a spat, CEO Arthur T. was removed, causing workers to strike.. When your non-union workforce walks off the job for you, you are doing something right as an owner.) https://en.wikipedia.org/wiki/Market_Basket_protests https://en.wikipedia.org/wiki/Market_Basket_protests Though Trader Joes (Aldi North ) is here, Aldi just started opening up here. Those style markets are affordable, but don't have the selection of the Market Baskets. https://en.wikipedia.org/wiki/Aldi https://en.wikipedia.org/wiki/Aldi I wonder if the fact that these are privately held is an advantage.
- foobarian 4y ago
  There is a lot more than those in Mass. Shaws, Starmarket, Stop&Shop, Wegmans, Aldis, Roche Bros, Whole Foods, Trader Joes...
  - lwf 4y ago
    Note that Shaw's and Star Market are both Albertsons :)
not2b 4y ago
Monopoly power is the biggest driver of inflation right now. The price spike after the Covid restrictions ended was expected, but it wasn't expected to persist. But businesses used inflation as an excuse to jack up prices more than costs would justify, to increase profit, blaming inflation for this. Ordinarily some competitor would respond by selling the same products for less and taking market share away, but since there are only a few big competitors they can all rachet up the prices together.
- testfoobar 4y ago
  This comment conflates inflation with monopolistic pricing/cartel pricing where either a single entity or a group of entities collude to drive up prices. Monopolistic and cartel power should be restricted or regulated. So for example, I don't believe this merger should be approved. Corporations are in the business of increasing profit - Covid didn't magically incentivize companies to become more greedy than before. Corporations are always greedy. Why leave any profit on the table? Take for example, a tech worker that has learned to switch jobs every few years, increasing base+bonus with each job change. Are they greedy?
  - specialist 4y ago
    Consumers (and infotainment) regard any price increases as "inflation". Agree that we should cease carve out and resume chartering corporations to serve the public interest.
  - not2b 4y ago
    If prices go up, it is inflation, whether it is caused by cartel pricing or by the traditional "too much money chasing too few goods". I'm suggesting, and there seems to be good evidence for this, that when economies were first opening up as Covid restrictions were eased it was mainly the latter problem, but now it is mainly the former problem.
SoftTalker 4y ago
> It’s a bit like a private equity firm blood-letting someone after buying the person a life insurance policy the private equity firm then gets to collect. So, like long-term care insurance. Biggest scam I've ever personally encountered.
- 1123581321 4y ago
  Bit of a headscratcher! I guess the analogy is nursing homes are buying LTC policies and then maiming the beneficiaries so they require full-time help but stay alive long enough to beat the premiums? :) If you just meant you had trouble getting LTC to payout, that may be. The payout ratio is close to 1.0, slightly better for women and significantly worse for men (the women-to-men ratio is skewed among the elderly.) So the industry makes its money on float like other competitively-priced insurance products. But it’s still difficult to qualify for a good home or get in-home care approved and started. Staying in it longer than six months is also challenging, and can draw extra scrutiny since patients who stay longer than that are likely to stay closer to two years, which makes the policy a big money-loser. It doesn’t help that most agents only sell LTC as an add-on to boost their production, rather than consult with it as an expertise.
rootusrootus 4y ago
Maybe we should pass some kind of regulation that forces every business to clearly label the ultimate owner of the company. So instead of going to Fred Meyer, it should say "Fred Meyer by Kroger". And let's extend that to all the random brands that litter grocery store shelves trying to look like they came straight from a local farm. Consumers should be reminded that they're just buying factory food in a pretty container. I'm only kind of kidding.
- cwkoss 4y ago
  I think that would be great, why are you kidding about it?
- lotsofpulp 4y ago
  A quick search online answers this question without the need for legislation.
  - rootusrootus 4y ago
    That is a good point. Maybe I will write a mobile app where you can scan a UPC code and it will tell you who really makes it. And something similar for all the big stores.
- jacobr1 4y ago
  Where do you stop in the ownership chain? I brand-name that is just a department of a registered company? A fully owned subsidiary? What about majority stakes in public companies? What about ownership stakes in holding or investment firms? What percentage of ownership is interesting to note at each level?
  - maxerickson 4y ago
    SEC uses 5%. It would probably work fine for the stated purpose (not missing many important owners, not listing overly many).
    - 4y ago
subsubzero 4y ago
I really don't know how this will go through. I feel like Safeway/Vons was already a monopoly and then they merged with Albertsons, which to me feels like a grocery chain that is gigantic. Now they are merging with Kroger and this to me seems insane. Now I know alot of people will say who cares, lots of grocery stores owned by one company what could happen? Well having a chain this big they could raise the price of food in many cities to whatever they want with no repercussions as people have to eat and there is no more competition. I know in my city this merger would mean we would have no grocery stores that are not owned by Kroger(Walmart and Target still sell food though). Its a pretty scary proposition.
jasonladuke0311 4y ago
This would, I believe, make Kroger the only major grocer in the Denver area. I'm not counting Sprouts, Whole Foods, Trader Joe's as they are not very widespread.
- massysett 4y ago
  Walmart has a lot of supercenters and Neighborhood Market locations so you'll have at least two grocers. I suspect though that Kroger/Albertsons will sell off some of the stores to mollify regulators.
gizmondo 4y ago
Putting the antitrust issue aside, it seems to me some people want the owners of the businesses to be similar to NFT owners. Some symbolic notion of possession with no rights. Comparing dividends with arson, seriously? It's more like moving money from one pocket to the other. > It’s a bit like a private equity firm blood-letting someone after buying the person a life insurance policy the private equity firm then gets to collect. Companies are not people, their existence has no worth on its own.
not_enoch_wise 4y ago
The engineering institution of excellence we call Albertson’s may be over.
billiam 4y ago
This is a truly horrible trend. A huge failure of one of few the things almost all agree government is for. Where I live in California I have decided that besides Best Foods mayo and a couple of items like corn syrup for pecan pie once a year, I have no reason to walk into a chain grocer and instead buy locally from produce stores in my neighborhood or from Trader Joe's which has both excellent quality and excellent value if less SKUs. It has greatly improved my life as a consumer.
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bluedino 4y ago
Not a huge fan of Kroger at the moment. We had FIVE stores when the local chain owned them. Kroger bought them out, and slowly closed them. Each neighborhood had its own Kroger. They built a shiny new big store where an old A&P was. And then, closed the two reimagining "old" Krogers. It was great at first, huge bakery, a cheese section, olive bar, all new coolers etc. But the store quickly went to crap. It's also packed because half the city is there in any given day. They bragged about spending millions refreshing the store, but they can't even have more than 2-3 checkout lanes open. This has all gotten worse during the pandemic. It's almost as bad as Walmart now.
- rexf 4y ago
  > they can't even have more than 2-3 checkout lanes open Long lines at limited checkout lines is awful. Supermarkets do it because they don't want to hire more staff. Consumers notice it and will shop elsewhere... unless they live in a place where there are no nearby competing supermarkets.
- CadmiumYellow 4y ago
  I have both a Kroger and a Publix within a three minute drive of my house and within a couple blocks of one another. I willingly pay 25-50% more to shop at Publix because Kroger is such a nightmare. The store is filthy, the meat section always smells bad, the produce goes bad within 24 hours if it's not already spoiled on the shelf, and they never open more than two checkout lines despite the fact that it's the busiest store in the area. You often end up waiting 15 minutes just to use the grimy self-checkout kiosks. This is also one of the "nice" Krogers with the fancy cheese section etc. Meanwhile Publix is always immaculate, the employees are friendly and helpful, they almost always have all their checkout lanes staffed, and the quality of the meat and produce is worlds better. I think Publix has been deliberately moving in close to Kroger locations in the south because they know they can jack up their prices and still find people practically begging to shop there because the experience at Kroger is so unpleasant.
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animitronix 4y ago
If ever there was a merger that needed to be blocked...
alex_young 4y ago
I don’t like consolidation like this one bit, but assuming that the deal does fail, doesn’t that leave the PE firms owning an asset with no operating cash, while only having cashed out about 17% of the value? It seems unlikely that they would engineer this with the exception that it would fail, thus destroying their company.
gwm83 4y ago
this should be blocked. I cannot imagine any consumer benefit
sheepybloke 4y ago
A tangent, but after one thing I miss after moving to the west coast is the Michigan chain Meijer. I didn't realize how nice Meijer was until my only two options for a standard grocery store were Safeway and Walmart. And after reading the comments, I hope they stay afloat for a long time. In my mind, they are the perfect grocery store.

269 points by connor11528 4y ago

See also, grocery corporation CEOs bragging about price gouging under the cover of "inflation" during investor calls, https://pluralistic.net/2022/10/17/united-states-vs-vons/#pricing-power https://pluralistic.net/2022/10/17/united-states-vs-vons/#pr... >As Kroger CEO told his shareholders: "a little bit of inflation is always good in our business" because it lets him raise prices and "customers don’t overly react." etc, etc.

sokoloff 4y ago
A little bit of stable inflation is good for almost every business. Massive inflation shocks are bad for lots of people and businesses.
- bombcar 4y ago
  And the CEO isn't wrong - customers are used to gas prices flailing all over the place, but they notice food price changes, and so things "build up" over time and when the dam finally breaks, it breaks hard. Arizona Iced Tea started at 99 cents in 1997 - today that should be $1.83 but it's still 99 cents. Same with Costco's hot dog and chicken (though they've done some noticeable changes on the hot dog). When the dam breaks, it's not going to go up 10%, it's going to skyrocket to try to make up for lost time.
  - lotsofpulp 4y ago
    Those are not good examples. One is sugar water with extremely high profit margins, and the other is likely sold as a loss leader or at most, at cost. Food prices have been changing for a long time, but only if you pay attention to quantity and ingredients. With gas prices, the unit quantity or ingredient cannot change, so the change is obvious. Same with things like milk and eggs and vegetables though, which do change often. With processed food, the seller has much more ability to maneuver around having to increase price.
    - bombcar 4y ago
      Yeah - my point was that once prices start going up noticeably, all the other processed food manufacturers will increase their prices, also (often with a "return to what the original size was" along with it).
    - ch4s3 4y ago
      [*edit] I probably shouldn't have weighed in on this.
      - lotsofpulp 4y ago
        Is this at the retail level? At the producer level, profit margins seem quite decent: https://www.investopedia.com/ask/answers/071015/what-profit-margin-usual-company-food-and-beverage-sector.asp https://www.investopedia.com/ask/answers/071015/what-profit-... Logically, if the same quantity of Arizona Ice Tea retails for the same price as it did 25 years ago, then someone in the supply chain is or was making huge profit margins, considering the increase in materials and transport costs.
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  - Firmwarrior 4y ago
    Adding onto this a little: I was shocked at how volatile some food prices are, and how much some have gone up recently https://www.fao.org/worldfoodsituation/foodpricesindex/en/ https://www.fao.org/worldfoodsituation/foodpricesindex/en/ Depending on how you set your endpoints, you can basically come up with any number for inflation you want, from 1.7% to 20+% I guess this is all well-understood and taken care of under the hood by processed food companies, though, since the Big Mac Index has pretty steadily held to an inflation level near the CPI
    - jacobr1 4y ago
      The big mac index tracks labor costs as much if not more-so than wholesale food prices.
      - lupire 4y ago
        Price of anything can be reduced to labor, energy, and scarcity as, you move up the supply chain.
  - datavirtue 4y ago
    It's because the consumer literally has to buy hundreds of things. Tinkering with a penny turns into a dollar real quick.
    - lupire 4y ago
      That's not how it works. It's percentage changes that are significant.
      - datavirtue 4y ago
        Every thing in my cart increases by a penny. It (the cart, my food) now costs $2 more. Easy math. Change that to percentages and amount increases, of course. They do play with pennies. I worked in a huge national restaurant chain as a teenager and went through numerous menu updates. They were always flipping nickels and pennies all over the place on the menu. As a kid I thought changing the menu prices by five cents was ridiculous. Apparently, that's how it works in this business with razor thin margins.
- adamsmith143 4y ago
  There's a reason why corporate profits are at all time highs. they're just pushing any inflation related costs and more directly to consumers and scraping even more profit off the top. This is actually just not even controversial, completely supported by data. https://fred.stlouisfed.org/series/CP https://fred.stlouisfed.org/series/CP
  - themitigating 4y ago
    I can't believe you're being downvoted
  - hellojesus 4y ago
    That may be the case, but that should allow a new competitor to come in and offer lower priced goods.
    - metadat 4y ago
      Yeah, starting a new local grocer or even national grocery chain is pretty easy, right? Why don't you lead the charge.
      - hellojesus 4y ago
        Because I have no incentive to do so? I could, certainly, but until this deal proves rotten there is no impetus for action.
  - coldcode 4y ago
    If they were at all time highs the stock market would not be done so much.
    - fzeroracer 4y ago
      The stock market hasn't been connected to reality for years. Companies which produce nothing and are deep in debt have high stock value purely on basis of speculation. Most companies that report layoffs, tough times etc also report record levels of profit because it's not enough to be profitable, you have to go well above and beyond profit. You have to squeeze out everything even at the cost of short term stability.
collegeburner 4y ago
absolutely how "price gouging" has gone from meaning "charging $100 for a case of water during a hurricane" to "adding a 15% markup to some groceries".
- geraldyo 4y ago
  Both are examples of price gouging... ?
  - happyopossum 4y ago
    No, price gouging is actually a thing which means a thing - it's not a term you can just apply to whatever you want. Most states define it as charging inflated prices during a crisis or emergency, not simply raising prices beyond what geraldyo thinks is reasonable.
    - replygirl 4y ago
      If some term has different meanings in different legal contexts, and you believe that having a meaning in a legal context precludes having a distinct colloquial meaning, how can you tell GP they're using the wrong meaning before you've asked where they're posting from? Wikipedia: "Price gouging occurs when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair."
      - collegeburner 4y ago
        it never had that meaning. it's a concerted effort by democrat politicians and media: they say "price gouging" because that's something most people agree is wrong when it's actually normal economic behavior in response to both parties' really stupid economic policies. they're doing this because they want more control of pricing and that's how they're going to lie their way into it and spread disinformation about what's happening. edit: updating with proof, Texas state definition is "selling or leasing fuel, food, medicine, or another necessity at an exorbitant or excess price, or demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine or another necessity."
PragmaticPulp 4y ago
To put this in context: Grocery starts famously have razor-thin margins because the business is so competitive. Kroger's most recent reported net profit margin was 1.7% with gross margins (e.g. before company expenses) in the 22% range. Compare that to the SaaS companies, where many of us collect our paychecks, that can have gross margins in the 60-90% range. If you want to call companies out for price gouging and excessive profit margins, taking Kroger to task for a 1.7% net margin seems kind of silly. Especially when most of us engineers are collecting paychecks from companies with far, far higher margins than that.
- dan_quixote 4y ago
  There's nothing wrong with a healthy profit margin, per se. The potential problem here is that we have a de facto monopoly in many regions which controls access to FOOD.
  - noasaservice 4y ago
    If it gets too bad, that's how you end up with riots, local politicians dead, buildings torched, etc. Food riots are not something you fuck with.... If history has anything to say about that. I don't think we've seen that scope here in the US... Yet. But given the number of guns, "it's a when, not an if" if the politicians allow extreme food scarcity to happen in a wide area.
    - themitigating 4y ago
      Politicians allow? Not the business? The calls for government regulation by the same gun toteing people who constantly complain about big government is so confusing.
    - datavirtue 4y ago
      My senical take on food stamps has been one of politicians feeding the poor to prevent reality. In the US you are talking about 40+MM people who cannot afford to feed themselves. If half of them missed a few meals all of our other problems would disappear under the ensuing sea of shit.

jaywalk 4y ago

The fact that Albertsons is going to be liquidated to essentially force the issue is scummy beyond belief. Private equity is out of control.

stjohnswarts 4y ago
Exaclty, it decreases competition, decreases the number of stores, increases prices, etc. Why have regulators if they won't kill these megadeals that really only help the corps involved and harm the public interest everywhere else.
lotsofpulp 4y ago
This is not private equity. Kroger is a publicly listed company, and so is Albertsons. I suspect the reason for this is Albertsons is facing heavy competition from other grocery stores, their financials look terrible. A lot of established grocery stores are getting upended at the lower end by Aldi/Lidl/Walmart/Target/Costco, and at the higher end by Whole Foods/Trader Joes/etc. Kind of reflects income/wealth gap trends. You are either selling at the lowest prices, or you are selling at higher prices to a niche population on the rich side of town. Edit: ignore this comment, I had wrong information.
- addragyn 4y ago
  Most certainly is private equity. Didn’t read the article? The 4b special dividend that will be issued will go to two PE firms. According to the author’s analysis this will strip out the working capital and enrich the PE participants. Likely sending the company and by extension the workers to the debt markets. I didn’t read the financials but if true this is just shithead financial engineering. :(
  - lotsofpulp 4y ago
    I was wrong to write that the deal is not private equity, it is setup by private equity firms, but it is up to all the other investors to see if they want to go ahead with the deal, hence the need for a shareholder vote. I do not see how the special dividend can legally go to two firms. It would have to go to all shareholders. Cerebrus does own 150M/475M shares = 30% of Albertsons, but for some reason, I do not see Apollo in the list of top shareholders. https://finance.yahoo.com/quote/ACI/holders/ https://finance.yahoo.com/quote/ACI/holders/ But their press release from May 2020 says they bought 17.5% of Albertsons: https://www.apollo.com/media/press-releases/2020/05-20-2020-140452880 https://www.apollo.com/media/press-releases/2020/05-20-2020-...

whartung 4y ago

I heard about this the other day. I can't express how much I dread it. Folks get invested in their local grocery stores, we do at least. And we were neck deep in the last merger with Safeway, since it destroyed the store that we went to. Albertsons bought Safeway, but as part of the deal, they had to sell off some of the stores (which made sense, our store, Vons, was right across the street from the local Albertsons store). Somehow, Hagans (a small northwest chain) got roped in to sell the extra stores too. Hagans "overnight" grew from, like, 12 stores to over 200. Shockingly, the transition did not go well, there were cries of shenanigans, and Albertsons ended up buying all of the stores back. Some of the local stores that closed due to the merger reopened, other's didn't. Our store never reopened. In over 8 years, that space and sat empty in the downtown area. My mustache twisting cynicism tells me that Albertsons is keeping the lease on that space, and keeping it empty, to prevent an Aldi from renting it out and setting up shop right across the street. Didn't help, turns out one is moving in down the street after renovating a closed hardware store. Maybe they'll give the space up now. That merger was a mess, caused a lot of disruption, cost a bunch of jobs. We shop at Albertsons, there's a Ralphs (Kroger) closer, but we like Albertsons better. With 3 years of COVID induced "new normal", I'm not looking forward to the collateral damage from a merger like this.

UncleOxidant 4y ago
We had Hagens around here too. They closed down and most of the sites have been empty for years. There was a Safeway not too far away that closed down several years back (maybe part of that merger agreement) that's been empty for years... now I see an Albertsons is moving in there. The main 2 chains in our area are Fred Meyer (Krogers), Safeway & Albertsons (both really Albertsons) so this merger will mean that all those stores are now really owned by the same corporation.
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deeblering4 4y ago
I'm quite thrilled to see low price groceries like Aldi come in and take business away from these bloated supermarket chains. After making the switch it's hard to shop at a typical grocery store. Everything is ridiculously marked up and the floor plan is ridiculously sprawling.

Panino 4y ago

> Kroger/Albertsons would... own and operate brands such as Safeway, Ralphs, Smith’s, Harris Teeter, Dillons, Fred Meyer, Vons, Kings, Haggen, Tom Thumb, Star Market, Jewel-Osco, and Shaw’s. The illusion of competition. Then within that single company posing as many are found food products sold by a handful of megacompanies like Kraft, Nestle and General Mills, each posing as a multitude of companies "competing" with one another. For this and other reasons, it's best to cook and eat whole foods (onions, sweet potatoes, etc.) instead of consuming foodlike products that were manufactured.

mikestew 4y ago
In the PNW, I don't think it even creates the illusion. What grocery stores are left that wouldn't be under that umbrella? In Redmond, WA, the only ones that come to mind are Trader Joe's, PCC, and Whole Foods. One could probably shop at PCC and get everything one needs for food. Whole Foods, sure, but it's pricey and now you're dealing with just another giant corporation trying to eat the world. But it is starting to look like there's going to be Kroger and Publix (if you live far enough south). Meanwhile our government agencies are over there playing with their fiddles.
- xxpor 4y ago
  In the Seattle area, Town & Country markets are nice, but expensive. PCC may work for some folks, but they don't carry some fairly basic things like... Coke. (also crazy expensive).
- __derek__ 4y ago
  Your list is missing Grocery Outlet, Target Grocery, Costco, and the smattering of Asian grocers. You could probably also add Amazon Fresh delivery. But, yes: nobody in our area is under the illusion that Fred Meyer and QFC (or Safeway and Albertsons) compete with each other.
  - mimikatz 4y ago
    Also the largest which is Wal-Mart, I assume they sell food in the PNC

mimikatz 4y ago

I swear people look at this these mergers the wrong way. The people who get squeezed are less likely to be the consumers and more likely to be the producers.

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jmole 4y ago
It's both? This is America, where muscular middlemen squeeze out the middle class so that capital flows to the top. Margin for producers? Not gonna happen. And for consumers? raise prices and lower portion sizes until profits start to decline. Rent-seeking is the American dream
- lotsofpulp 4y ago
  > Rent-seeking is the American dream I assume it is everyone’s dream.
  - skinnymuch 4y ago
    Don’t think it was Marx’s or MLK’s or Malcolm X’s dream (I don’t mean the white washed MLK, etc)
  - r00fus 4y ago
    If you are 100% self-interested, sure. Most people have a moderate amount of empathy, so it's not their "dream".
    - lotsofpulp 4y ago
      It would be interesting to find someone that turns down a $10M trust fund that yields $200k+ passive income. In either case, there might be some people that would eschew that, but I doubt the population of people that would accept (or dream about it) it is restricted to “Americans”.

gwbrooks 4y ago

The combined firm, post-merger, would have 15% of the U.S. grocery market. Walmart has ~18%. It's OK to dislike the deal because you see a beloved brand being absorbed. It's even OK to dislike the deal because you hate private equity. But aggregating up to a 15% market share doesn't look like a monopoly concern to me.

nightfly 4y ago
Nation wide it might be only 15% but in a town it might mean that all (or at least all non-outlet) grocery stores are now owned by one company
- themadturk 4y ago
  In my city we have two Safeways, a Fred Meyer (Kroger), a QFC (Kroger) a Walmart Supercenter, a WinCo, a couple of other smaller grocers, and Costco. Before the Albertsons-Safeway merger we used to have a couple of Albertsons, and even a Haggen. Those are all gone now, not replaced by anything. There's another couple Safeways not far out of town, and another Fred Meyer as well. With this kind of geography, we're likely to lose at least one Safeway (it's literally across the street from Freddy's), and possibly one or another of those not-too-far-away Freddy's and Safeways. It's not exactly going to create a food desert, but real choice will go way down. I already split my shopping between Fred Meyer and Walmart, mostly because of supply concerns between the two.
- gwbrooks 4y ago
  Agreed. But the policy horse is already out of the barn on that dynamic. See also: Independent bookstores, small/regional general stores, farming, water and electric utilities in many markets, etc.
- loeg 4y ago
  Yeah, including towns like Seattle. Kroger + Albertsons are probably 70% of the market here.
clairity 4y ago
"monopoly" is a red herring here. if they were under 10%, you might have a case (though there are many factors besides market share that need to be considered, like supplier power). the issue that we the people, and by extension our antitrust regulators, care about is market distortion, and 15% is well within the range at which a competitor can unduly distort a market in their favor by sheer size alone. markets exist for the benefit of society as a whole, not just giant corporations.

nerpderp82 4y ago

If this goes through, we might as well disband the FTC.

muststopmyths 4y ago
>Amusingly, the law firm representing Kroger is Arnold & Porter, whose antitrust practice is headed by Debbie Feinstein, the Obama era FTC Bureau of Competition Director who actually approved the Albertsons/Safeway merger and its laughably stupid remedy. I bet it does go through
- KerrAvon 4y ago
  Not necessarily. Biden's head of the FTC is strikingly unsympathetic to big mergers and other large business shenanigans. Obama's presidency was awful. Every promise to the center/left broken, and a huge, continuous giveaway to the right, who repaid him by slapping him in the face. He implemented Romney's healthcare plan. He kept the bankers out of jail / gallows after the 2008 crisis -- "Too big to fail". (The bankers repaid Obama's kindness by heavily funding the GOP.) He kept us in Afghanistan. And Republicans hated him for giving them everything they wanted. So frustrating to watch.

pphysch 4y ago

My closest Kroger-owned outlet has a "cheap" feel but many prices are actually much, much higher than the nearby Trader Joe's. More on par with Whole Foods. An insidious conglomerate.

lotsofpulp 4y ago
Some grocery stores like Aldi and Lidl and Winco and Costco and Walmart have a strategy of pricing low all the time (e.g. everything at ~115% of their cost to source it). Some, like Kroger and Albertsons, price some things low and some things high, betting that people coming into the store for a lower priced product will pay more for the convenience of not having to go to another store. And this is frequently accomplished by giving out coupons (e.g. some things are losing them money, some are at cost, some are at 100% profit margin).
- rhino369 4y ago
  When I worked at an Albertson's subsidiary store, there was a bunch of stuff that was "on sale" 3 out of every 4 weeks, but the "sale" price was the real price and you'd just get ripped off the 4th week.
  - lotsofpulp 4y ago
    The crazy part is a good portion of the population prefers feeling like they got a deal because something is “on sale” rather than just paying a lower non sale price. See JC Penney’s disastrous experiment with removing sales/coupons and just offering low prices.
    - Mountain_Skies 4y ago
      Harbor Freight is going through a variation of this now. They used to be famous for their coupons that were so easy to obtain that the shelf price might as well have been the coupon price. Changing over to just having the shelf price be the true price has been poorly received by a good chunk of regular shoppers there, even though what they really did was get rid of the ceremonial dead chicken waiving of using coupons. Haven't checked recently but I think they've started reintroducing coupons because people loved feeling like they were getting a special deal even if they weren't.

unethical_ban 4y ago

This only solidified my position that market capitalism is more dangerous than worker owned corporations by far. When 50,000 people own all portions of the economy, every unnecessary white collar worker “optimized” out of a job, every blue collar worker replaced by robotics, where is our society?

skinnymuch 4y ago
> This only solidified my position that market capitalism is more dangerous than worker owned corporations by far. Belated Welcome! We need more people like you
addragyn 4y ago
This is not “market capitalism”. This is anti competitive behavior, perpetuated by Wall Street that is enabled by the tax code. Independent / other grocers can’t compete because the fundamentals of the business have nothing to do with the game being played.
- unethical_ban 4y ago
  Eh, I mean, I still think some kind of "market-based" capital system is reasonable - I don't want government-orchestrated markets for all goods and services, but clearly our society has not done enough to regulate the immoral extremes of free markets.
  - throwawaymaths 4y ago
    The state and its policy encourage free markets to be immoral because they fetishize "growth" as a metric. I'm not saying growth is bad, but morally speaking, it should be consisered at best neutral. A growth-agnostic capitalist system would be interesting.
    - unethical_ban 4y ago
      Agreed. Our society should be measured in the happiness and health/living security of its citizens, and by technological advancement. The acquisition of wealth can be a means to that end, not the end itself.

doodlebugging 4y ago

Maybe if they keep consolidating all the grocery suppliers they will reach a point where their pricing ability locks out the poorest people and rich people finally make it onto the menu.

adrr 4y ago
Still have Walmart, and target. Also Amazon has moved in with steep discounting. There’s also the discount grocery stores like Trader Joe’s.

flerchin 4y ago

How can the "special dividend" that cripples the company be good for the company, or shareholders. That alone ought to be illegal, the merger is just window dressing.

quantified 4y ago
It's typical for PE to pay themselves well. The next step is to load the vehicle up with debt and shop it out. If it tanks (Toys R Us etc.) then no biggie for the PE's partners, they didn't shop there anyway.

prpl 4y ago

Combined, my family has easily more than 60 years at Smith's over 3 generations dating back to the 70s - my dad had more than 40 alone before they canned him. It is not an understatement to say I grew up in a grocery store. Kroger has been a bit more ruthless in the last 5 years, and basically pulled an IBM in late 2019: https://www.cnbc.com/2019/10/02/kroger-to-lay-off-hundreds-amid-questions-about-its-turnaound-plan.html https://www.cnbc.com/2019/10/02/kroger-to-lay-off-hundreds-a... They called it "middle management" in press release but they fired tons of senior people in the stores that had been around a long time (anyone over 50 who'd been at the company more than 25 years was a good candidate). In any case - management at a grocery store might as well be a blue collar job in comparison to most any other white collar job. The severance package was decent - most got 9 months pay. Still, getting canned in your 50s from one of the only jobs you've ever known isn't pleasant, but it didn't surprise me. Management at the established grocery businesses. There was a lot of talk about The Bear in the restaurant industry - the grocery industry at the departmental management level and above is similar, albeit usually less ruthless and a lot more petty. Everyone gets written up a lot and their jobs hung over their head often. I think it's probably gotten a bit better in the last decade though, partially as some of the old people have started to be replaced with college grads I suppose. As for Safeway, I've been in the bay area since 2010 and I can't really say I'd shed a tear to see Safeway under different management. I remember my introduction to Safeway when I went to buy eggs and bacon and was shocked to see it at $7/package in 2010. I settled for the Jimmy Dean sausage at the time, because it was on sale. This simple introduction holds true -most Safeway prices are out of line with a reasonable price _unless_ things are on sale. That was not something that was true at Smith's, or Winco, or even Raley's (Nob Hill Foods) in general. Safeway even took over Andronico's in the bay area and _raised_ prices even more - while reducing the product quality and selection. Compared to Whole Foods, prices are actually competitive on a day-to-day basis. The best thing Safeway has going for itself at this point is that is that it's ubiquitous and it usually has self-checkout lanes (which is the only way to get in and out of a store in a reasonable amount of time anymore). To sum it up - I think Kroger is on a path to trying to turn more profit at the expense of workers and consumers alike, but I don't think Safeway can get much worse either. It's going to be shit all the way down, you just hope it's not the super smelly kind.

4y ago

acomjean 4y ago

In Massachusetts we have a private grocery store chain called "Market Basket". Its cheaper than the rest and spreading. (After the 2 realtive that owned it had a spat, CEO Arthur T. was removed, causing workers to strike.. When your non-union workforce walks off the job for you, you are doing something right as an owner.) https://en.wikipedia.org/wiki/Market_Basket_protests https://en.wikipedia.org/wiki/Market_Basket_protests Though Trader Joes (Aldi North ) is here, Aldi just started opening up here. Those style markets are affordable, but don't have the selection of the Market Baskets. https://en.wikipedia.org/wiki/Aldi https://en.wikipedia.org/wiki/Aldi I wonder if the fact that these are privately held is an advantage.

foobarian 4y ago
There is a lot more than those in Mass. Shaws, Starmarket, Stop&Shop, Wegmans, Aldis, Roche Bros, Whole Foods, Trader Joes...
- lwf 4y ago
  Note that Shaw's and Star Market are both Albertsons :)

not2b 4y ago

Monopoly power is the biggest driver of inflation right now. The price spike after the Covid restrictions ended was expected, but it wasn't expected to persist. But businesses used inflation as an excuse to jack up prices more than costs would justify, to increase profit, blaming inflation for this. Ordinarily some competitor would respond by selling the same products for less and taking market share away, but since there are only a few big competitors they can all rachet up the prices together.

testfoobar 4y ago
This comment conflates inflation with monopolistic pricing/cartel pricing where either a single entity or a group of entities collude to drive up prices. Monopolistic and cartel power should be restricted or regulated. So for example, I don't believe this merger should be approved. Corporations are in the business of increasing profit - Covid didn't magically incentivize companies to become more greedy than before. Corporations are always greedy. Why leave any profit on the table? Take for example, a tech worker that has learned to switch jobs every few years, increasing base+bonus with each job change. Are they greedy?
- specialist 4y ago
  Consumers (and infotainment) regard any price increases as "inflation". Agree that we should cease carve out and resume chartering corporations to serve the public interest.
- not2b 4y ago
  If prices go up, it is inflation, whether it is caused by cartel pricing or by the traditional "too much money chasing too few goods". I'm suggesting, and there seems to be good evidence for this, that when economies were first opening up as Covid restrictions were eased it was mainly the latter problem, but now it is mainly the former problem.

SoftTalker 4y ago

> It’s a bit like a private equity firm blood-letting someone after buying the person a life insurance policy the private equity firm then gets to collect. So, like long-term care insurance. Biggest scam I've ever personally encountered.

1123581321 4y ago
Bit of a headscratcher! I guess the analogy is nursing homes are buying LTC policies and then maiming the beneficiaries so they require full-time help but stay alive long enough to beat the premiums? :) If you just meant you had trouble getting LTC to payout, that may be. The payout ratio is close to 1.0, slightly better for women and significantly worse for men (the women-to-men ratio is skewed among the elderly.) So the industry makes its money on float like other competitively-priced insurance products. But it’s still difficult to qualify for a good home or get in-home care approved and started. Staying in it longer than six months is also challenging, and can draw extra scrutiny since patients who stay longer than that are likely to stay closer to two years, which makes the policy a big money-loser. It doesn’t help that most agents only sell LTC as an add-on to boost their production, rather than consult with it as an expertise.

rootusrootus 4y ago

Maybe we should pass some kind of regulation that forces every business to clearly label the ultimate owner of the company. So instead of going to Fred Meyer, it should say "Fred Meyer by Kroger". And let's extend that to all the random brands that litter grocery store shelves trying to look like they came straight from a local farm. Consumers should be reminded that they're just buying factory food in a pretty container. I'm only kind of kidding.

cwkoss 4y ago
I think that would be great, why are you kidding about it?
lotsofpulp 4y ago
A quick search online answers this question without the need for legislation.
- rootusrootus 4y ago
  That is a good point. Maybe I will write a mobile app where you can scan a UPC code and it will tell you who really makes it. And something similar for all the big stores.
jacobr1 4y ago
Where do you stop in the ownership chain? I brand-name that is just a department of a registered company? A fully owned subsidiary? What about majority stakes in public companies? What about ownership stakes in holding or investment firms? What percentage of ownership is interesting to note at each level?
- maxerickson 4y ago
  SEC uses 5%. It would probably work fine for the stated purpose (not missing many important owners, not listing overly many).
  - 4y ago

subsubzero 4y ago

I really don't know how this will go through. I feel like Safeway/Vons was already a monopoly and then they merged with Albertsons, which to me feels like a grocery chain that is gigantic. Now they are merging with Kroger and this to me seems insane. Now I know alot of people will say who cares, lots of grocery stores owned by one company what could happen? Well having a chain this big they could raise the price of food in many cities to whatever they want with no repercussions as people have to eat and there is no more competition. I know in my city this merger would mean we would have no grocery stores that are not owned by Kroger(Walmart and Target still sell food though). Its a pretty scary proposition.

jasonladuke0311 4y ago

This would, I believe, make Kroger the only major grocer in the Denver area. I'm not counting Sprouts, Whole Foods, Trader Joe's as they are not very widespread.

massysett 4y ago
Walmart has a lot of supercenters and Neighborhood Market locations so you'll have at least two grocers. I suspect though that Kroger/Albertsons will sell off some of the stores to mollify regulators.

gizmondo 4y ago

Putting the antitrust issue aside, it seems to me some people want the owners of the businesses to be similar to NFT owners. Some symbolic notion of possession with no rights. Comparing dividends with arson, seriously? It's more like moving money from one pocket to the other. > It’s a bit like a private equity firm blood-letting someone after buying the person a life insurance policy the private equity firm then gets to collect. Companies are not people, their existence has no worth on its own.

not_enoch_wise 4y ago

The engineering institution of excellence we call Albertson’s may be over.

billiam 4y ago

This is a truly horrible trend. A huge failure of one of few the things almost all agree government is for. Where I live in California I have decided that besides Best Foods mayo and a couple of items like corn syrup for pecan pie once a year, I have no reason to walk into a chain grocer and instead buy locally from produce stores in my neighborhood or from Trader Joe's which has both excellent quality and excellent value if less SKUs. It has greatly improved my life as a consumer.

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bluedino 4y ago

Not a huge fan of Kroger at the moment. We had FIVE stores when the local chain owned them. Kroger bought them out, and slowly closed them. Each neighborhood had its own Kroger. They built a shiny new big store where an old A&P was. And then, closed the two reimagining "old" Krogers. It was great at first, huge bakery, a cheese section, olive bar, all new coolers etc. But the store quickly went to crap. It's also packed because half the city is there in any given day. They bragged about spending millions refreshing the store, but they can't even have more than 2-3 checkout lanes open. This has all gotten worse during the pandemic. It's almost as bad as Walmart now.

rexf 4y ago
> they can't even have more than 2-3 checkout lanes open Long lines at limited checkout lines is awful. Supermarkets do it because they don't want to hire more staff. Consumers notice it and will shop elsewhere... unless they live in a place where there are no nearby competing supermarkets.
CadmiumYellow 4y ago
I have both a Kroger and a Publix within a three minute drive of my house and within a couple blocks of one another. I willingly pay 25-50% more to shop at Publix because Kroger is such a nightmare. The store is filthy, the meat section always smells bad, the produce goes bad within 24 hours if it's not already spoiled on the shelf, and they never open more than two checkout lines despite the fact that it's the busiest store in the area. You often end up waiting 15 minutes just to use the grimy self-checkout kiosks. This is also one of the "nice" Krogers with the fancy cheese section etc. Meanwhile Publix is always immaculate, the employees are friendly and helpful, they almost always have all their checkout lanes staffed, and the quality of the meat and produce is worlds better. I think Publix has been deliberately moving in close to Kroger locations in the south because they know they can jack up their prices and still find people practically begging to shop there because the experience at Kroger is so unpleasant.

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animitronix 4y ago

If ever there was a merger that needed to be blocked...

alex_young 4y ago

I don’t like consolidation like this one bit, but assuming that the deal does fail, doesn’t that leave the PE firms owning an asset with no operating cash, while only having cashed out about 17% of the value? It seems unlikely that they would engineer this with the exception that it would fail, thus destroying their company.

gwm83 4y ago

this should be blocked. I cannot imagine any consumer benefit

sheepybloke 4y ago

A tangent, but after one thing I miss after moving to the west coast is the Michigan chain Meijer. I didn't realize how nice Meijer was until my only two options for a standard grocery store were Safeway and Walmart. And after reading the comments, I hope they stay afloat for a long time. In my mind, they are the perfect grocery store.