Tom Uryga: A Local View of the Kroger/Safeway Merger

Kroger Corp. is merging with Safeway/Albertsons, (which includes numerous other brands nationwide). The total merger represents 20% of the US grocery market. In order to satisfy regulators concerning monopoly issues, they are selling 579 stores in 18 states & Washington D.C. to C&S Wholesale Grocers (Piggly Wiggly). 

While this story is focused on Oregon and the Portland metro area specifically, I suspect the same factors are at play in the other 18 affected states.  There are over 70 affected stores in the entire state of Oregon and the immediately adjacent Vancouver, Washington area. 

But let’s look a little closer at Portland in specific. The metro area population is nearly 2.5 million of the 4.2 million in Oregon. The City of Portland itself is around 630,000. Kroger is selling EVERY Safeway, Albertsons, and QFC in Multnomah County (City of Portland)…21 stores. 

Coincidentally, Multnomah County just voted out a Soros-funded DA who intentionally did not prosecute massive retail theft. The new guy will struggle to do better because of the intransigence of city and County government dominated by what amounts to drug-addled wealthy Marxists. There’s only around 700 cops in Portland, down from over 1100 twenty years ago. Less than half of what most cities this size employ. 

In surrounding Washington and Clackamas counties, less burdened by Marxists, the situation is somewhat better, but Kroger is dumping the stores that anyone familiar with the area can see are those in areas where Portland crime bleeds over. They also include some rather low income areas, but mainly due to crime. 

The buyers of these stores are in for a surprise. Of note, C&S Grocery’s Piggly Wiggly stores are franchise-owned, not corporate…shifting the risk of ownership to small, indivual investors or groups.  Lacking Western distribution hubs, keeping stores stocked will be a challenge. 

They need only look what happened several years ago when Safeway and Albertsons merged and sold off their (worst performing) stores as an anti-monopoly gesture.  Other than a few smaller locations that transitioned into successful Mexican groceries, the majority are now other businesses…from PetSmart to flea markets to ethnic religious centers and Halloween costume stores. 

The grocery operators who bought them were simply unable to compete with Safeway/Albertsons and Fred Meyer(Kroger) market domination on a basis of cost and the fact the divestment included their worst performing locations. In a very few cases, Safeway/Albertsons bought back stores they sold…typically with government concessions on taxation and/or outright grants for site improvement. 

The idiotic government mandate for divestment will once again have the same result; even more market consolidation than the alleged intention was to avoid. 

I guarantee you the financial analysts at Kroger/Safeway/Albertsons are FAR smarter than the politicians and their minions “supervising” this merger. This gives Kroger a HUGE financial incentive to abandon low-performing and crime-ridden stores in craphole neighborhoods, focusing on those that make money and have lesser negative operational factors. 

The consolidation of three separate weekly mailbox sales flyers (Fred Meyer, Safeway/Albertsons and QFC) into just one is a huge savings in printing, postage, and pricing strategy all by itself. 

Does the likely permanent loss of these stores produce the leftist dreaded “food deserts” in those bad neighborhoods?  It sure does…but it isn’t Kroger’s problem anymore. It’s squarely on the shoulders of whoever franchises the stores from C&S, and the government idiots that facilitated this mess. 

So the root cause of those “food deserts” in virtually every case nationwide??? Meddling by the very same, inherently leftist, politicians who simply don’t understand how the world around them actually works.

Tom Uryga is a former USMC Officer / A-6E pilot and jet flight instructor. He has also been an IT Director, Unocal Chemical CIO Resources, Global Business Owner, Factory Tooling Manufacturer and currently, a corporate pilot for Transmedics

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