There continues to be speculation that if federal regulators allow the $24.6 billion acquisition of Albertsons by Kroger, the stores that will have to be divested by the two companies could be acquired by Amazon.
Whether the number of divested stores is 300, 500, 600 or even more, the belief is that this could be a vehicle for Amazon to finally get the kind of footprint it has long desired for a grocery offering. And the belief is that such an investment by Amazon would help to save the jobs that some worry could be lost as the result of such a deal.
In the latest bit of speculation and analysis, Salon writes:
"To be clear: Is it confirmed that Amazon will acquire the divested Kroger/Albertsons locations? No. But is it possible? Yes. And would that be a good thing? Well, this is where things get a little hazier.
"It's easy to look at the prospect of Amazon taking on these locations with a lot of cynicism. 'Oh, great. Another monopoly benefiting from the monopolization of the American supermarket industry.' But for many folks who live in food insecure communities, where supermarket options are already limited, an Amazon-owned grocery store is better than no grocery store.
"What this prospect ultimately highlights is the extent to which the American grocery landscape is broken. Here's the thing: As Purdue University Northwest professor Anthony Sidone recently said, the merger between Kroger and Albertsons won't even make it the largest supermarket chain in the country.
It will just bring it up to the current scale of Walmart.
"'It looks like their strategy will be to serve the grocery market segment that stands between the Whole Foods and Dollar General segments,' (Purdue University Northwest professor Anthony) Sidone told the Northwest Indiana Times. 'The grocery market is extremely competitive and both Kroger and Albertsons might have sensed a squeeze between the opposite ends of the grocery market segments.'
"Perhaps — as the cost of a typical grocery visit has shot up by 10% over the last year — the idea of these mega-corporations feeling the squeeze feels like poetic justice. Or perhaps it's just another reminder that we — and especially our most vulnerable citizens — ultimately have to pay the price with fewer choices when they do."
- KC's View:
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I remain unconvinced that Amazon would snatch up even a small number of the stores that would have to be divested by Kroger and Albertsons. As I've said here in the past, there is this kind of speculation every time a retailer starts shutting stores or launching going-out-of-business sales. It happened with Sears. Toys R Us. Bed Bath & Beyond. Radio Shack. And more. This is lazy thinking by analysts who see Amazon as the easy solution.
There are a few good reasons that Amazon shouldn't do this. First, it hasn't been particularly successful with the bricks-and-mortar stores that it does operate, so there's no good reason to increase the pain. Second, it is being more careful with its money, not less. And third, Amazon hasn't figured out what its physical grocery stores should be, and it has to do that before it opens more of them. To this point, other than Whole Foods, its grocery stores have been formats that serve the technology it offers; it would make a lot more sense for Amazon to figure out what its unique and differentiated value proposition is, and then use the technology to serve it.
