Union leaders react to Kroger, Albertson's planned store sell-off

Unions representing grocery store workers across the Western United States expressed their continued disagreement with Kroger’s proposed mega-merger with Safeway owner Albertsons.

Wednesday, the two companies announced a plan to divest more than 500 stores . Most of them, 124, are in the state of Washington.

If the merger is approved, C&S Wholesaler would buy and operate the stores, promising not to lay anyone off, will recognize existing union agreements, and will not close any stores.

The promises sound concerningly familiar to John Marshall, a financial analyst for Seattle-based unions UFCW 3000 & 324, which represents grocery workers.

He says the three companies’ promises sound similar to those made in 2015 when Albertson’s bought Safeway.

Then, Albertson’s sold 146 stores to smaller, Washington-based retailer, Haggen.

According to the Washington Attorney General’s lawsuit aimed at blocking this merger , Haggen had 18 stores at the time of the sale, filed for bankruptcy after buying the Albertson’s stores, and ended up selling 50 stores back to Albertsons.

Kathy Finn, the president of California-based UCFW 770 says in the Los Angeles area, many of the Haggen stores closed within six months.

In this case, C&S Wholesaler does operate a distribution business supplying thousands of grocery stores on the East Coast, but it only operates 23 stores, meaning it would increase its footprint by 25 times if the merger is approved. Additionally, C&S would take on hundreds of store pharmacies, but it only operates one pharmacy at the current moment.

Marshall doesn’t think C&S is up to the task and fears a similar outcome to Haggen and the 2015 merger.

“C&S did not demonstrate to us that they have the capacity to stand up a retail grocery and pharmacy chain in the markets where they propose to do so,” he said.

Marshall believes evidence in stock markets points to the futility of the plan. Kroger has offered to buy Albertson’s at $27.25 per share, but Albertson’s stocks have not sold since the merger and recently sat at $19.34 per share.

Marshall points to C&S reported declining sales as reason to doubt its ability to take on a large number of stores, saying sales dropped even as prices rose significantly during the pandemic and years after.

“They are not a retailer, they are not one of the competitors currently in the retail food sector in the United States,” Marshall said, “Kroger wanted to have it both ways. They wanted to be able to divest a certain number of stores to give the appearance that they’re trying to remedy the anti-competitive effects of the proposed merger. At the same time, they don’t want to have a real competitor that they would lose market share to.”

Marshall doesn’t buy many of the claims from Kroger, Albertsons, or C&S, saying the companies can make any kind of promises, but unless it is in writing as part of a deal, they aren’t beholden to them.

That comes with unions as well—C&S and Kroger say C&S will respect existing union deals, but Teamsters have called C&S “the most notorious anti-union employer in the industry .” Marshall says C&S leaders admitted they would campaign against union efforts at non-unionized operations.

“This is a company with a long history of closing union operations and moving volume to non-union operations,“ Marshall said.

When asked, C&S reiterated that it would respect established union deals but did not refute Marshall’s claim.