KROGER IN COURT: C&S Retail’s Future Leader Takes the Stand
The Federal Trade Commission’s (FTC) lawsuit to block the Kroger-Albertsons merger proceeded in an Oregon courtroom on Sept. 5 with a focus on the divestiture package and efficiencies.
While the FTC believes the proposed $24.6 billion merger raises competitive concerns in an already consolidated industry, Kroger claims that it has addressed any potential competitive issues through an arm’s-length divestiture with third-party grocery wholesaler C&S Wholesale Grocers, LLC, including an amended divestiture agreement that specifically responded to regulator concerns.
Kroger released the list of the stores, distribution centers and plant locations that it plans to divest to C&S back in July. Some 579 Kroger and Albertsons stores, as well as other assets, will be divested as part of the plan.
C&S is the largest grocery wholesale distributor in the United States, and the eighth largest privately owned company in the country. The company currently operates 25 retail supermarkets and is a franchisor of 165 additional locations.
As reported by Bloomberg, Susan Morris, the executive tapped to lead C&S’ new retail business, told the federal judge that “I’m confident in our ability to run these stores. I don’t want to run another mini-Kroger or a mini-Albertsons. This is a chance to run something distinct.” Morris is a long-time executive at Albertsons who currently serves as the company’s chief operating officer.
C&S will need to rebanner 286 of the stores it is acquiring, reported Bloomberg. Morris said C&S has two years to change the names, which gives the company “a nice runway” to ease its customers through the transition. At Albertsons, Morris said she had been involved in many store name changes, including when the company bought American Stores in 1998 and its 2015 purchase of Safeway.
“The names matter, they do,” she said. “But what matters more is how you run the store.”
Kroger is standing strong that the divestiture to C&S will preserve the competition that the FTC claims the merger threatens to destroy. The nationwide grocer points out that C&S’s existing distribution network positions it well for retail expansion, and its massive procurement network and deep industry experience will enable C&S to aggressively compete in the grocery retail market.
After the merger closes, Kroger says C&S will be the eight-largest nationwide retailer in total grocery sales, bigger than H-E-B, Trader Joe’s and Sprouts Farmers Market.
The FTC approved C&S as a divestiture buyer of retail grocery stores in 2021 and C&S 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 over 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.
