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THE FRIDAY 5: Kroger’s Lawsuit Dismissal Denied; Save Mart Acquired

Restructuring at Rite Aid, PG’s 2024 Grocery Tech Trends study also gained attention
Emily Crowe, Progressive Grocer

Welcome to The Friday 5, Progressive Grocer’s weekly roundup of the top news and trends in the food retail industry. Each Friday, we’ll take a look at the stories that are most important to our readers and also keep tabs on the trends that are poised to impact grocers.

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Kroger store - Indy
A bid by Kroger to dismiss a lawsuit in the state of Colorado seeking to halt its $24.6 billion merger with Albertsons has been denied.

1. Kroger, Other Grocers Face Mounting Legal Issues

It’s been a short but busy week here at PG, with news of several grocers facing legal issues gaining the most interest from readers. A bid by The Kroger Co. to dismiss a lawsuit in the state of Colorado seeking to halt its $24.6 billion merger with Albertsons Cos. has been denied. The court there believes that since Kroger does business in the state, it is responsible for upholding its monopoly laws.

For its part, Kroger argued that Colorado’s case against it is redundant because it is already facing a similar lawsuit at the federal level. The court, however, disagreed, saying that dismissing the case "would be at odds with numerous rulings recognizing states as co-equal antitrust enforcers.” Kroger CEO Rodney McMullen has vowed that the grocer is ready to fight for the merger in court.

On July 1, U.S. Rep. Jimmy Gomez, D-Calif., sent an oversight request to several government entities, outlining concerns regarding Chedraui/Smart & Final's unfair labor practices and calling for regulatory, legislative or enforcement actions. 

The letter comes as the grocery chain plans to close two unionized Smart & Final warehouses in Commerce and Riverside, Calif., terminating more than 600 warehouse workers and forcing them to reapply for employment at $10-$12 less per hour at a new nonunion mega-warehouse in Rancho Cucamonga, Calif. The workers represented by Teamsters Local 630 are currently on strike, protesting the mass layoffs and other practices by the company.

Meanwhile, the U.S. Department of Justice recently revealed that the United States filed a civil lawsuit against Gristede’s Foods NY Inc. alleging violations of the Clean Air Act and the EPA’s Recycling and Emissions Reduction Rule due to the grocer's failure to comply with regulations designed to limit the emission of refrigerants from appliances at its store. To resolve the lawsuit, Gristedes entered into a consent decree that will cost the food retailer millions. 

2. Save Mart Acquired By Canadian Group

The acquisition of The Save Mart Cos. by Vancouver, Canada-based Jim Pattison Group made waves this week. The California-based grocer operates the Save Mart, FoodMaxx and Lucky banners in the Golden State and western Nevada, while Jim Pattison Group is the parent company of Pattison Food Group, which operates a number of retail banners including Save-On-Foods and Buy-Low Foods.

Shane Sampson, executive chairman of Save Mart, will remain with the company, along with the rest of the senior leadership team. The grocer’s headquarters will also remain in Modesto, Calif.

“Our primary focus continues to be serving our associates, our customers, and our local communities by providing the freshest quality products at a great value,” a Save Mart representative said in a statement. “Our next chapter is primed for long-term, sustainable growth and innovation and we have full faith in a bright and enduring future.”

Los Angeles, CA - June 8, 2023: Closeup of Rite Aid pharmacy and convenience market, with newer logo on brick wall.; Shutterstock ID 2314796609
Rite Aid's restructuring plan has been approved, and the company will now cut its debt by about $2 billion and turn over control to its key creditors.

3. Operational Transformation in the Works at Rite Aid, Balls Food Stores

It was a week of transformation for two retailers. A U.S. bankruptcy judge has approved Rite Aid’s restructuring plan, which will help the company cut its debt by about $2 billion and turn over control to its key creditors.  

The judge said the restructuring had saved the company from having to shut down and liquidate operations. Rite Aid plans to exit from bankruptcy in about a month, funded by $2.55 billion in financing provided by its lenders.

Balls Food Stores, meanwhile, has revealed that it will transfer ownership of its 25 grocery stores to the company’s employees, building on the founder’s history of creating an associate-centered culture. The decision to form an employee stock ownership plan comes as the Kansas City, Kan.-based independent grocer celebrates its 100th anniversary. 

4. Taking on Tech Trends

PG’s second annual tech trends study revealed this week how retailers can meet the needs of tech-savvy shoppers without losing the human touch. Even as apps become more advanced and new tools continue to improve the shopping experience, tomorrow’s consumers will still look for a human element as they navigate the aisles. 

That’s one of the major findings in Progressive Grocer’s second annual Grocery Tech Trends Study, which includes results from both retailer and shopper surveys. Read on to learn more.

5. Dollar General Brings Fresh Food Forward

Finally, an exclusive interview with Dollar General about how its DG Market concept is filling fresh food gaps earned reader interest this week. The company is expanding into small towns and remote communities, and earlier in 2024, Dollar General hit key milestones, opening its 20,000th store at its DG Market location in Alice, Texas, and offering fresh produce in 5,000 locations. 

The retailer’s DG Market format is on the march, providing a variety of produce, refrigerated and frozen food products, fresh meats, and dairy items to new and different markets around the United States. 

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