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

The 2002 closure of the Fred Meyer grocery store serving Rockwood was a blow to the Gresham neighborhood, leaving a hole in its center and one less option for groceries.

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

Now, a proposal from Kroger Co. to buy Albertsons has residents wondering if that store could end up shuttered, too. If Albertsons were to close in Rockwood as a result of the merger, it would “put a dent in the community,” said Catherine Nicewood, president of the neighborhood association, though it’s one of the most expensive options remaining.

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

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

The Oregonian/OregonLive identified roughly 33 Kroger and Albertsons-owned stores across the state that sit within a mile of one another, including 20 in the Portland metro area. More than 100 are less than two miles apart.

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

Kroger and Albertsons are two of the state’s biggest grocery chains, with 171 stores altogether.

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

Anticipating this, Kroger and Albertsons said in an announcement last week that they’re 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 biggest grocery chains, with a combined market share that’s even bigger than Walmart.

Kroger didn’t address potential store closings in its filing with the Securities Exchange Commission, but it’s common to shutter stores during a large retail merger, according to retail analysts. Spinning off the redundant stores isn’t a surefire solution, either.

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

Haggen, a small Washington state grocery chain, agreed to purchase and rebrand 146 West Coast Safeway and Albertsons locations following the merger with Safeway. But within months, the overextended Haggen filed for bankruptcy and sold several of those stores back to Albertsons for a much cheaper price. Others closed for good.

Executives at Kroger and Albertsons expect the deal to go through in early 2024 and, at that point, the two companies will start making choices on which stores will stay or go and under which banner they’ll operate.

Kevin Coupe, retail analyst and author of the grocery blog Morning News Beat, thinks that the companies’ proposal to divest up to 375 stores might not satisfy regulators.

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

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

Meanwhile, the deal is facing pushback from consumer advocates, labor unions and politicians as the 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 spell grocery prices going unchecked. He said the potential merger could also result in more food deserts that’s likely around areas with lower incomes.

“They’re not going to close down their biggest brightest stars within their quiver,” he said. “They’re going to be probably going out to lower performers, performing stores, maybe stores that are adjacent to, say, rougher neighborhoods, or in areas that have…