The biggest supermarket chain, Kroger, announced plans to buy its next largest competitor, Albertsons, Friday in a $25 billion deal.
How could that affect Idaho where Albertsons is based?
The stores
Several Idaho cities have both a Fred Meyer – owned by Kroger – and an Albertsons. That means overlap, and to the Federal Trade Commission, that’s likely a red flag.
In its acquisition announcement, Kroger seemed prepared for this. It said it would divest up to 375 stores to a spin-off company. The company could end up selling those stores in places where there's overlap with Albertsons, including Idaho.
"We’re probably going to see a lot of Albertsons stores be put up for sale," said David Livingston, a supermarket industry analyst.
He said Kroger would not want to sell those stores to a competitor, but instead, an under-performing business for a lower price. Then, he said, it could buy some stores back if they aren't doing well.
Something like this happened when Albertsons and Safeway merged in 2015. Washington-based Haggen Food & Pharmacy bought about 150 Albertsons stores and quickly went bankrupt.
"As soon as they got the keys to the door, the sales plummeted," Livingston said. Then, Albertsons bought some of the shuttering Haggen stores. "Alberstons, Kroger, they'd like to see this happen again."
The employees
Albertsons is in the top-5 largest Idaho employers with about 5,000 local workers. In 2016, about 600 worked at the headquarters. Livingston guessed the office will probably stay and some jobs could be eliminated to avoid overlap, but he doesn’t think it’ll be significant.
"They're two large organizations, and one can't run the other alone," added Joe Feldman, a senior managing director at the Tesley Group.
Miles Eshaia, the communications director with grocery union UFCW Local 555, which includes workers at Albertsons and Kroger stores in Idaho, said members’ wages and hours are secure, but that the union doesn't have enough information at this point to know how it could affect workers beyond that.
Kroger said in its announcement it plans to invest $1 billion in wages and benefits when the deal is done. The company already has about 3,000 employees in Idaho.
The customers
The two companies tend to approach the retail market similarly, with an emphasis on fresh products, private label products and loyalty programs.
"A big initiative for both Kroger and Albertsons is to do more locally," Feldman said. That could mean sourcing local produce, meat, or packaged products.
Kroger said increased customer data from Albertsons would help it create a more personalized loyalty program and improve its digital and delivery grocery services.
The target is for this deal to close in 2024, so little will change for consumers for a while, Feldman said.
Troy Oppie contributed reporting to this story.
Find reporter Rachel Cohen on Twitter @racheld_cohen
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