KROGER IN COURT: All Eyes on Divestiture Plan
As Washington state’s antitrust case against the proposed $24.6 billion Kroger-Albertsons merger entered its fourth day on Thursday, Sept. 19, the focus was squarely on the grocers’ divestiture plan with C&S Wholesale Grocers. The three witnesses who took the stand were Alona Florenz, C&S SVP of corporate development and financial planning and analysis; Joseph Welsh, CEO of Joseph Welsh Consulting and an expert in supermarket retail operations and rebannering; and Mark McGowan, C&S president of retail.
Kroger and Albertsons have already agreed to divest 579 stores to C&S, the largest grocery wholesale distributor in the United States, and the eighth-largest privately owned company in the United States. Kroger believes that C&S’s existing distribution network positions it well for retail expansion, and that its procurement network and deep industry experience will enable C&S to aggressively compete in the grocery retail market.
Kroger contended that C&S is budgeting $150 million per year to bring down prices and better compete with large players such as Walmart, and that prices at C&S post-merger will be lower than many current prices at Albertsons stores.
Additionally, Kroger said that C&S will welcome 67,000 store associates and 1,000 team members who support stores from both Kroger and Albertsons. C&S currently operates 25 retail supermarkets and is a franchisor of 165 additional locations.
As part of the merger, C&S is getting a clone of the technology stack that Albertsons currently uses to run its business, and will also receive three years of historic customer transaction data from Kroger and Albertsons to help develop a loyalty program.
Albertsons COO Susan Morris, an industry veteran with nearly four decades of grocery experience, will lead C&S’ retail division post-merger. Of the 579 stores in the divestiture package, Morris is already running 486 of those stores today. These are teams in geographies that already report to Morris.
C&S was already approved as a divestiture buyer of retail grocery stores in 2021 by the FTC. The company continues to operate all but one of the stores it acquired through the 2021 and 2022 Piggly Wiggly Midwest and Tops Market divestitures.
Cincinnati-based Kroger serves more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names. The grocer is No. 4 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America.
As of June 15, Albertsons Cos. operated 2,269 retail food and drug stores with 1,725 pharmacies, 403 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The Boise, Idaho-based company operates stores under more than 20 banners. Albertsons is No. 9 on The PG 100.
Keene, N.H.-based C&S is No. 18 on PG’s list.
