business news in context, analysis with attitude

More reactions to the proposed Kroger-Albertsons merger, one MNB reader wrote:

I’ve worked closely with both chains in the past and spent 14 years working for Kroger.  This acquisition doesn’t make sense to me for the following reason:

Duplication of stores with Kroger in all major Safeway/Albertsons divisions: Seattle, Portland, Southern California, Southwest (PHX), Denver, Southern (DFW and Houston).  Moderate duplication in Chicago.  This leaves new markets for Kroger of Shaw’s and Acme. 

They (Kroger) will surely have to close and/or sell many of the competing Safeway stores (including Tom Thumb and Randall’s).  I guess they could run multiple banners in these markets, like they do in Seattle with Fred Meyer and QFC.  The net gain does not seem that big.  Must be more to this story than first meets the eye.

Another perspective, from another MNB reader:

IMO, this merger makes perfect business sense for A/S & Kroger.  It’s all about battling Walmart.

Historically, of the 64 measured markets by Nielsen & IRI, there are only SIX where Walmart isn’t #1 in ACV: Des Moines, Tampa, San Antonio, Louisville, Cincinnati, and Grand Rapids (I’ll bet you can pick out what those six have in common).  Everywhere else, Walmart reigns supreme.  We saw how Walmart, with its scale and “bargaining power”, largely won the inventory battle that waged between all retailers during the supply chain disruptions of the last two years.  Now, two of the nation’s top grocers that lost out in many of those battles are trying to join forces against a common opponent to insulate their businesses and protect market share.

The business case seems pretty clear to me, however, the motivations of those opposing the merger seem less crystal.

And, from another reader:

Unwieldy strikes me as the operative word. Albertsons/Cerberus neglected chains like Shaw's for years, I can't see Kroger plowing millions of dollars into a company that at best is now 3rd or 4th in the markets they serve. 

One more reader chimed in, challenging several assertions by Kroger leadership:

McMullen pointed to a few examples of where it can drive higher profits and better margins. One of the biggest opportunities is capturing more shopper data across a wider number of banners, which can be turned into lucrative online ads. The combined company would have reach to about 85 million households across the country. 

Ridiculous- Manufacturers who do advertise here are using the retailers' already allotted marketing funds.  This is just “shifting” the dollars around. Additionally – so your telling me this is about GETTING INTO THE AD BUSINESS VERSUS SELLING GROCERIES.

A bigger Kroger would also have cheaper manufacturing costs and better bargaining power, too, McMullen said. Together, the companies would become one of the largest consumer packaged goods companies in the country with a combined portfolio of about 34,000 total private label products across price points. Those include organic items and premium products that often retail for less than name brand national competitors. 

McMullen's comment about being “one of the largest consumer packaged goods companies in the country”  is comical.  Kroger, you make Private Label and a WEAK Private Label to boot!  The Private Label of Kroger/Albertsons is made up of MANY SKUs – a TERRIBLE comparison to a strong consumer packaged goods company.  Additionally, the Private Label Brand of Kroger/Albertsons has very little “equity” with the consumer.  He talks as if the strength of the Brands is like an HEB or Trader Joes Brand.

But tell us how you really feel.

In my FaceTime yesterday, I disagreed with the reader who suggested that my recent experience with Covid should make me more skeptical about vaccine efficacy.  I said it was precisely the contrary - the vaccines and booster shots I received gave me enormous protection for more than two years, and I am extremely grateful to the scientists who developed the them - when I finally got Covid, I was never worried about severe disease, hospitalization, or worse, unlike people who got Covid before vaccines were available.  More than a million people have died from Covid-related causes, and I think it is absurd for people to ignore the likelihood that if there had been no vaccines, the number would've been a lot higher.

MNB reader Katie Rigby wrote:

Thanks for sharing your experience. Appreciate your perspective on vaccinations—we’re on the same page. I got a call from the CDC this past week asking about my vaccination status and how concerned I was about getting Covid. It’s not that I’m unconcerned as a 4-time vaccinated person; I’m just somewhat concerned. Thank goodness for both the vaccination and the treatments.

One MNB reader wrote:

Amen to your thoughts on the vaccine.

When you have car trouble you don’t call your dentist.

And, from another reader:

Nice job not blasting the vax skeptic. I am vaccinated but somewhat skeptical so not sure what camp I fall into. I had covid pre-vax and was sick for a few days. Tired for much longer. Got vaccinated when the prescribed waiting period was over according to the docs.

I do think the doctors all worked in good faith and this is not a giant conspiracy against humanity. Although the politicization of the outbreak was/is sickening.

Certainly, something needed to be done right away but the speed at which they moved to get this done makes me question the current process on getting needed drugs to market affordably.

Emergency circumstances sometimes require extraordinary measures.  I think that was where we found ourselves, and I, for one, am happy - and, as I said, grateful - about how public health officials did their absolute best to keep as many people safe as possible.