Kroger-Albertsons merger raises fears of store closures; here’s where the chains compete in Oregon

The 2002 closure of the Fred Meyer Grocery Store serving Rockwood dealt a severe blow to the Gresham neighborhood, leaving a hole in the center and one less option for grocery shopping.

The next success came in 2015, when a merger between the Albertsons and Safeway brands resulted in the closure of a nearby Safeway store. That left an Albertsons store as the last supermarket chain in the area.

Now, a proposal by Kroger Co. to buy Albertsons has residents wondering if that store might close, too. If Albertsons were to close in Rockwood as a result of the merger, “it would hurt the community,” said Catherine Nicewood, president of the neighborhood association, though it is one of the more expensive options left.

“Rockwood is considered a food desert, and we’ve been trying to bring places where people can easily access healthier food options at an affordable price,” Nicewood said. Losing the Albertsons would be yet another setback.

The $24.6 billion sale would bring Albertsons, Safeway, Fred Meyer and QFC under one corporate umbrella, leaving the chains with dozens of stores in Oregon that could now be considered redundant.

The Oregonian/OregonLive identified approximately 33 Kroger- and Albertsons-owned stores statewide that are less than a mile away, including 20 in the Portland metro area. More than 100 are less than two miles away.

Many are within line of sight of a neighboring store. In Oregon City, for example, Fred Meyer, Safeway and Albertsons are within blocks of each other.

Albertsons and Kroger in Oregon

Dozens of Oregon grocery stores owned by Kroger Co. (Fred Meyer and QFC) and Albertsons Cos. (Albertsons and Safeway) are located near other stores and could be considered redundant if the chains merge. Here, stores are shown with a 1-mile buffer.

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Kroger and Albertsons are two of the largest supermarket chains in the state, with 171 stores in total.

Kroger and Albertsons would likely have to ditch hundreds of stores nationwide to ease anticompetitive concerns from regulators including the Federal Trade Commission, according to retail analysts and consumer advocates.

In anticipation of this, Kroger and Albertsons said in an announcement last week that they are willing to divest between 100 and 375 locations by spinning them off into a separate company, called SpinCo in the filing, that would be controlled by Albertsons shareholders.

In Oregon, Kroger and Albertsons are two of the largest supermarket chains, with a combined market share that is even larger than Walmart’s.

Kroger did not address potential store closings in its filing with the Securities and Exchange Commission, but it is common to close stores during a large retail merger, according to retail analysts. Separating redundant stores is also not a safe solution.

Following the merger of Albertsons and Safeway in 2015, regulators required the chains to find a buyer for about 20 stores in Oregon in an attempt to stay competitive in the market.

Haggen, a small Washington state supermarket chain, has agreed to buy and rename 146 West Coast Safeway and Albertsons locations following the merger with Safeway. But within months, Haggen filed for bankruptcy and sold several of those stores to Albertsons for a much cheaper price. Others closed forever.

Kroger and Albertsons executives expect the deal to close in early 2024, at which point the two companies will begin making decisions about which stores will stay or go and under what banner they will operate.

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Kevin Coupe, a retail analyst and author of the Morning News Beat grocery blog, thinks the companies’ proposal to sell as many as 375 stores might not satisfy regulators.

“I think they’re going to have to divest close to a thousand stores,” Coupe said. “This is a much tougher FTC than maybe you’re used to dealing with, and we’re in a time of rising consumer prices.”

The proposed combined company would have annual revenue of $209 billion and operate 4,996 stores nationwide, according to Kroger. It would come close to rivaling Walmart, falling just $10 billion in annual revenue below the retail giant.

Safeway-Albertsons

A Safeway-Albertsons delivery center on Beaverton Hillsdale Highway in southwest Portland.

Meanwhile, the deal faces pushback from consumer advocates, unions and politicians as companies look to consolidate stores amid skyrocketing food prices.

Jagjit Nagra, executive director of the nonprofit Oregon Consumer Justice, said the proposed deal would be bad for consumers, as less competition could mean grocery prices go unchecked. He said the potential merger could also result in more food deserts that are likely to be found around lower-income areas.

“You are not going to close your biggest and brightest stars inside your quiver,” he said. “They will probably go to lower-performing stores, maybe stores that are adjacent to, say, more difficult neighborhoods, or in areas that have more crime, or maybe in areas that are just more rural.”

Kelley Fuller, a resident of Depoe Bay on the central Oregon coast, said the closest Fred Meyer and Safeway in Newport are across the street.

“If Kroger and Albertson are allowed to merge, we would almost certainly lose that Safeway,” Fuller said, “which would mean losing not only a grocery store, but also the pharmacy within it.”

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She said Lincoln City already lost a pharmacy when Bi-Mart pulled out of the pharmacy business, and that competing pharmacies became noticeably more “crowded and chaotic” afterward.

And he said having two supermarkets was important as the pandemic wreaked havoc on the supply chain.

“When Fred Meyer didn’t have the basics, Safeway sometimes still had them,” he said. “It would have been worse for the local communities if we hadn’t also had a Safeway to shop.”

Nagra, with a state consumer advocacy group, said the Kroger-Albertsons merger leaves areas that are already food deserts with even fewer options.

“Not only would they take away people’s ability to choose, but now they would have a direct impact on people’s health,” he said. “Because if you don’t have access to good quality food, I think it’s fair to assume that your health outcomes may not be as good.”

He said the deal could “do further harm and put pressure on consumers who are already struggling to buy food.”

But Kroger leaders said in a statement that it will reinvest $500 million to “lower prices for customers” and $1 billion to increase employee wages and benefits.

Earlier this week, US Senators Amy Klobuchar of Minnesota and Mike Lee of Utah said in a statement that the Senate Judiciary Subcommittee on Competition, Antitrust, and Consumer Rights Policy “will hold a hearing focused on this proposed merger and the aftermath.” that consumers may face if this deal goes through.”

The committee has “serious concerns” about the merger and wants a grocery market that “remains competitive so American families can afford to put food on the table,” Klobuchar and Lee said.

–Kristine de Leon, [email protected], 503-221-8506

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