Nearly two years after proposing their $25 billion merger, Kroger and Albertsons have disclosed the locations of the 579 stores, including nearly 70 in the Seattle area, to be sold off if the deal is approved.
The list, released Tuesday, includes 124 Washington locations of Kroger, which owns QFC and Fred Meyer, and Albertsons, which owns Safeway and Haggen. That would be nearly 40% of the two grocery retailers’ stores in the state.
The divested locations would be owned and operated by New Hampshire-based C&S Wholesale Grocers, which in theory would preserve competition in the dozens of local markets where Kroger and Albertsons now compete.
But as the news spread Tuesday, many shoppers and workers were trying to assess whether divestiture would bring major changes at their stores — or even closures, as some experts have warned, despite assurances from Kroger and Albertsons.
“What’s going to be the quality of the grocery store that moves in there?” said Karen Watts, a longtime shopper at the QFC in Seattle’s Wallingford neighborhood, which was one of the 12 QFC stores and three Safeway stores in Seattle that made the list.
Other Seattle-area divested locations include five QFC stores in Bellevue, two QFC stores and three Safeway stores in Tacoma, two Safeway stores and two QFC stores in Kirkland, and three QFC stores and one Safeway store in Redmond. No Fred Meyer locations appear to be on the list of divested stores.
Tuesday’s announcement appears to be an effort by Kroger and Albertsons to assuage concerns that a merger would result in higher prices for consumers.
It comes just weeks before a federal court in Oregon considers a government request to pause the merger while federal regulators scrutinize it for possible antitrust violations.
Critics of the merger, including regulators in Washington, Colorado and at the Federal Trade Commission, which have all sued to block the merger, claim C&S is mainly a wholesaler, with a relatively small retail operation.
As such, critics say, C&S might not be able to run the divested stores effectively enough to put real competitive pressure on a merged Kroger-Albertsons. Some worry C&S might ultimately end up closing some locations.
Consumers’ first question will be, “is my neighborhood store going to remain open?” said Jeff Green, a retail analyst with Hoffman Strategy Group who follows the grocery sector. “Second is, what happens with prices?”
Kroger and Albertsons have said the merger will mean lower grocery prices in part because the merged company would have the scale to compete with giants like Walmart and Costco.
They also touted C&S’ capabilities.
“C&S is a well-capitalized industry leader in wholesale grocery supply … with a strong track record as a successful grocery retailer,” an Albertsons spokesperson said Tuesday by email. “Their purchase of these assets … will enable their company to be one of the leading grocery retailers in the United States.”
The two grocery giants have also promised that no locations would be closed as a result of the merger. C&S has been less clear on the question of closures.
Asked Tuesday if it had ruled out store closures, the company didn’t offer an unequivocal no, but insisted that its expanded retail capacity under the merger “will undoubtedly ensure that these stores continue to successfully serve their communities for many generations to come.”
The spokesperson noted that C&S currently operates around 160 franchise and corporate-owned stores, and that the merger would bolster its retail capabilities by adding “hundreds of highly skilled grocery retail veterans from Kroger and Albertsons.”
Among them is Albertsons’ chief operating officer, Susan Morris, who will run C&S’ expanded retail operations if the deal is approved, according to a story in BoiseDev, a business news site in Idaho.
C&S has promised to honor existing union contracts for workers at divested stores. But some workers fear C&S will push for lower wages in future contracts.
They also worry that C&S may end up closing locations, despite earlier assurances by Kroger and Albertsons.
“Who knows if [C&S is] just feeling like, ‘Oh, well, these stores, they’re not making enough money, we’re going to close them all,’ ” said Brendan Gallagher, a meat cutter at the QFC store on Mercer Street near Seattle’s Space Needle.
“So then that’s like hundreds of people out of work, or having to go to different stores,” added Gallagher, who is a member of United Food & Commercial Workers Local 3000.
UFCW officials said that when they met with C&S in January to discuss the merger, C&S refused to affirm the earlier promise by Kroger and Albertsons that no locations would close as a result of the merger, said UFCW 3000 spokesperson Tom Geiger.
Shoppers also had mixed views of the divestitures.
Seattle resident Austin Osborn said he hoped C&S didn’t make any major changes at the Wallingford location, where he shops, “unless the change makes it cheaper, and then I don’t care.”
But Seattle resident Gene Shames shared regulators’ questions about C&S’ ability to operate as an effective competitor and hold down prices at a merged Kroger-Albertsons.
C&S is not “another retail giant, so I don’t have the highest of hopes that there’s going to be competition,” said Shames as he walked into the Wallingford QFC. Why, Shames asked, would Kroger and Albertsons sell to “an actual competitor?”
Since it was proposed, in 2022, the merger has been a flashpoint for consumers, labor groups and regulators. It’s an especially hot issue in Washington, which has an unusually large number of Kroger and Albertsons stores — around 329 in all, or around 10% of all Albertsons locations and 4% of all Kroger locations — and would also see the largest number of divested locations of any state.
On Jan. 15, Washington Attorney General Bob Ferguson filed the first government lawsuit seeking to block the merger on grounds that it violated state antitrust laws and would result in higher grocery prices. On April 26, a King County Superior Court rejected efforts by Kroger and Albertsons to dismiss the suit, which is scheduled to go to trial Sept. 16.
On Feb. 26, the Federal Trade Commission filed its own lawsuit seeking to the block the merger, citing similar concerns.
For all the consternation that resulted from Tuesday’s list, it might be moot.
On Aug. 26, the FTC will ask a federal court in Oregon to temporarily halt the merger, though a preliminary injunction, until the federal regulator can complete a full review of the merger.
Some experts think that if the court grants the injunction, Kroger and Albertsons might abandon the deal rather than wait for the FTC’s review, which starts this month and could last many months.
