Article has been updated with additional comment.
On Tuesday, Cincinnati-based Kroger and Boise-based Albertsons released a list of planned grocery store selloffs as part of their proposed $24.6 billion dollar merger.
A News Tribune review of the list this week shows a mixed assortment of potential outcomes for different areas, and no specific details yet on store overhauls for sites that will need rebranding.
That list includes 124 stores in Washington out of 579 nationwide. The bulk of Washington’s stores are in the Puget Sound area.
Among those sites, nearly 30 are in the South Sound or Tacoma-Olympia metro regions:
▪ Haggen — 1406 Lake Tapps Parkway E., Auburn
▪ Safeway — 101 Auburn Way S., Auburn
▪ QFC — 201 NE State Route 300, Belfair
▪ Safeway — 21301 State Route 410, Bonney Lake
▪ Safeway — 1401 NE McWilliams Road, Bremerton
▪ QFC — 1009 Monroe Ave., Enumclaw
▪ Safeway — 2109 SW 336th St., Federal Way
▪ Albertsons — 11330 51st Ave. NW, Gig Harbor
▪ Safeway — 4831 Point Fosdick Drive NW, Gig Harbor
▪ Safeway — 10105 224th St. E., Graham
▪ QFC — 4775 Whitman Lane SE, Lacey
▪ Safeway — 4700 Yelm Highway SE, Lacey
▪ Haggen — 1313 Cooper Point Road SW, Olympia
▪ Safeway — 4280 Martin Way E, Olympia
▪ Albertsons — 1434 Olney Ave SE, Port Orchard
▪ Safeway — 3355 Bethel Road SE, Port Orchard
▪ Safeway — 370 SW Sedgwick Road, Port Orchard
▪ Safeway — 708 Shaw Road, Puyallup
▪ Safeway — 611 S. Meridian, Puyallup
▪ Safeway — 600 Franklin St., Shelton
▪ QFC — 11104 Pacific Ave. S, Tacoma
▪ QFC — 4101 49th Ave. NE, Tacoma
▪ Safeway — 1624 72nd St. E., Tacoma
▪ Safeway — 2637 N Pearl St., Tacoma
▪ Safeway — 3842 Bridgeport Way, University Place
▪ Safeway — 705 Trosper Road SW, Tumwater
▪ Safeway — 500 Cleveland Ave. SE, Tumwater
Different scenarios for different stores
The plan is for the stores to be sold to New Hampshire-based C&S Wholesale Grocers, perhaps best known as the parent company of the Piggly Wiggly grocery chain. C&S would gain the QFC and Haggen brands as part of the deal.
So, for example, the Haggen on Cooper Point Road in Olympia would gain its second new owner following Albertsons’ buyout in 2016 but still keep its name.
Other Haggen-QFC stores that are retained by the newly merged Kroger Albertsons “will be re-bannered into one of the retained Kroger or Albertsons Cos. banners following the close of the transaction with C&S,” the companies said in April.
Safeway and Albertsons stores on the Washington selloff list would be rebranded by C&S, while Kroger would keep those brands on the stores it retains post-merger.
C&S’s role in the Kroger and Albertsons merger plans is to absorb sites to be shed by the grocery giants.
The divestiture plan still might not get Kroger and Albertsons where they need to be if the goal is for diversification of ownership in specific neighborhoods.
In one example, the two Lacey stores are less than a mile from each other on either side of Yelm Highway Southeast, which would make C&S the sole owner of the two instead of the current separate owners, Albertsons (Safeway) and Kroger (QFC).
Other selloffs include properties about two miles or less apart, including Safeway sites in Puyallup and Port Orchard.
There’s also the uncertainty that comes with new ownership, and the chance of a small town such as Belfair losing a competitor to Safeway in its city center if C&S chooses to close the neighboring QFC at some later date.
In Gig Harbor, a selloff of Albertsons near Target and the Uptown Gig Harbor Safeway also means the new company formed by Kroger-Albertsons would retain the Fred Meyer at Olympic Drive in a post-merger world.
The proposed Gig Harbor Safeway selloff would be the second ownership and brand change in less than a decade , after being sold to Albertsons in 2015.
Katrina Knutson is Gig Harbor’s city administrator. She told The News Tribune in response to questions on Wednesday, “The city will continue to monitor this situation and await determination of the lawsuits filed.”
The “lawsuits” are in reference to legal challenges filed by the Federal Trade Commission and multiple states, and separate lawsuits from Washington and Colorado, against the proposed merger.
Knutson noted that permits were “recently submitted to the city proposing to convert the Albertsons (near Borgen Boulevard) to a Safeway store.”
She added, “The estimated value of the tenant improvement is $500,000.”
According to the city’s permit portal, the application for a sign switch to rebrand the store was submitted June 24.
Some of the store locations in Tacoma have seen zoning-verification letter requests filed with the city, a not-uncommon move ahead of commercial property sales transactions.
The News Tribune has previously reported that Westgate North in Tacoma’s West End is on the market regarding that shopping center’s properties surrounding its “shadow anchor” Safeway store — on the list to be sold to C&S.
Amanda Lai is director of food industry practice at McMillanDoolittle, a retail consultancy firm in Chicago. She offered The News Tribune on Thursday possible outcomes in response to questions about the merger and potential future for stores listed in the selloff.
“For stores divested to C&S that are, in some cases, located down the street from each other, C&S has the opportunity to leverage the naming rights it acquired as part of the deal, convert the stores to its existing Piggly Wiggly or Grand Union brands, or introduce a brand new supermarket brand or brands altogether,” she wrote.
“The market overlap of stores gives C&S the option to experiment with multiple store formats within the same neighborhood,” she added. “This could look like co-locating a conventional supermarket near a value discount-focused concept, a natural and organic-focused concept, or an upscale gourmet concept.”
Lai also noted that “One of the terms of the deal is that C&S will retain all acquired stores and employees, but we cannot know for certain whether C&S will sell off the less-profitable locations years down the line after it has fully integrated the new stores into its portfolio.”
Challenges to plan continue
In a release April 22, Rodney McMullen, Kroger’s chairman and CEO stated that the “updated divestiture plan continues to ensure no stores will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading health care and pension benefits alongside bargained-for wages.”
McMullen maintained that the merger would “bring lower prices and more choices to more customers and secure the long-term future of unionized grocery jobs.”
A group of unions representing Kroger and Albertsons grocery workers in Washington and other states said in a statement Tuesday that the selloff list “changes nothing.”
“We remain focused on stopping the proposed mega-merger for the same reasons we have stated since it was first announced over 20 months ago — because we know it would harm workers, it would harm shoppers, it would harm suppliers and communities, and it is illegal.”
The unions planned a news conference Thursday morning to highlight their opposition further with news media.
Later next month, the FTC will seek a preliminary injunction from a federal judge in Oregon to halt the merger proceedings. The FTC has argued the merger would reduce competition, among other issues, while advocates for the merger have argued Kroger and Albertsons need to join forces to compete against the likes of Walmart and Amazon.
Meanwhile, the state of Washington’s antitrust lawsuit against the proposed merger is set to go to trial in September.
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