A proposed merger between two of the biggest names in supermarkets would bring a new grocery banner to California, a scenario that rings familiar and perhaps ominous bells for local shoppers.
Many who remember a similar merger in 2015 are wondering how a store divestment by Kroger and Albertsons would disrupt shopping habits anew.
The US Federal Trade Commission and six states, California among them, are suing to prevent the proposed $25 billion tie-up between the grocery titans. The commission contends such a merger would hinder competition, drive up prices for consumers and lower wages for unionized workers.
Both companies, which operate 5,000 stores combined, have said merging would help them remain competitive. Progressive Grocer ranks Kroger and Albertsons fourth and ninth, respectively, among the top 100 grocers, trailing Walmart, Amazon and Costco.
The Kroger-Albertsons tie-up would mean spinning off nearly 600 stores, 63 of them in California, to C&S Wholesale Grocers for $2.9 billion.
While executives plead their case during the FTC’s antitrust trial in Oregon, shoppers are left with questions: Can California handle another grocery chain in its crowded landscape? And would it even survive?
Nearly a decade ago, another merger between Safeway and Albertsons flipped 83 stores in California to the Haggen brand, a small Pacific Northwest chain. The transition didn’t go well, as shoppers balked at the chain’s high prices. Haggen went bust in six months. Stores were left empty, sometimes for years, and hundreds of people lost their jobs. Albertsons eventually bought what remained of Haggen after it filed for bankruptcy.
So, who is C&S Wholesale? Longtime retail analyst Craig Rosenblum says most shoppers likely don’t know the New Hampshire-based wholesaler has been working in California for decades.
C&S distributes a broad spectrum of goods to independent grocers, supermarket chains and military commissaries from the East Coast to the West. It also owns the supermarket chain Piggly Wiggly, which it operates through franchising.
Craig Rosenblum, a longtime retail analyst and principal at Columbus Consulting, says a proposed merger between Kroger and Albertsons raises many questions for C&S Wholesale Grocers, which will buy nearly 600 stores cited for divestment if the deal goes through. (Photo courtesy of Columbus Consulting)
The opportunity for C&S to break into grocery retail is new, and Rosenblum says that prospect poses certain questions for the company. We asked Rosenblum to explain some of those intricacies. His answers have been edited for length.
Q: Can you tell us a little bit about C&S and what it does?
A: They’re one of the two, true national wholesalers today. So, they cover the full country, East to West, including Hawaii. Traditionally, they (and the other big supplier, UNFI) curate and distribute products to independent grocery stores.
Q: So, C&S is everywhere?
A: Yes, you’re unaware that you see them all the time because the reality is they’re in your marketplace currently.
Q: Do you think the merger will happen?
A: Nobody has a crystal ball with what’s really going to happen with the Kroger merger. It’s really still unknown. Depending on whom you believe in or what you want to believe, whether it will or will not happen, I tend to be a little more positive and think it will happen.
Q: Who, if anyone, would this merger hurt?
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A: I think the question really is how will it impact the independents in the market. If you’re an independent today, currently being provided product from C&S, and now C&S is taking over a competing store across the street or around the corner, that’s really tricky. I mean, do you stay in business with them? Do you find another supplier? There aren’t that many.
Q: Is Amazon a growing threat to traditional grocery chains like Kroger and Albertsons?
A: Absolutely. Amazon started selling groceries in 2007, and e-commerce grocery sales in 2020 were $25.6 billion and are projected to be $40.5 billion in 2024, up almost 9% from 2023. They also continue to tinker with Whole Foods and other brick and mortar formats.
I would also say the chains have to be on the lookout for continued value store growth from Aldi, Lidl and the dollar-store channel.
Q: Do you see C&S creating a new banner, or would they use their name?
A: Well, the way it’s publicly stated right now, they’re going to keep, at least for the first year, all the Albertsons banners. This makes this a little messier. You know, not only are they procuring products for everybody, now (operators) have to worry about ‘are they procuring them for your competitor across the street?’
Q: Are more grocery store banners a bad thing for shoppers? There are seemingly different grocery stores in every retail center.
A: You’d be surprised. I live in Dallas, and we have, at last count, over 40 different banners in which you can buy food within a 20-mile radius.
And then you get all of the supercenters, the Walmart, the Targets and Super Targets and four different Hispanic grocers. We have all the clubs stores, multiple convenience stores, like 7-Eleven, for example. So, when you add it all up, it’s a lot.
Q: Do shoppers like to stick close to home?
A: Retail and Covid and everything else taught us a lot about ‘buy everything on the internet.’ And in the end, it still comes back to an age-old adage of location, location, location. People shop where it’s convenient, and it’s close.
Q: So, how does C&S earn the trust of shoppers?
A: I think in the end, it’s going to come back to really focusing on the basics. Supplying product to the store, plus high service levels, which is something many of the grocers have struggled with since Covid. And then, being a really good retail operator. You know, stores are well maintained and clean and have good inventory.
Q: Will C&S struggle to meet California’s diverse demands in the grocery aisles?
A: It’s not new for them to be providing services to West Coast and California grocers. So, you know, I don’t think it’s gonna be an issue.
Q: Last question: Any chance we’ll see Piggly Wiggly or its concept in California?
A: Not sure if they will use this banner beyond the Midwest.
Craig Rosenblum
Today: Principal at Columbus Consulting International and advisory board member with the California Grocers Association
Background: Before joining Columbus Consulting, he was at Willard Bishop Consulting, where he led retail growth initiatives before the firm was acquired by Inmar Intelligence.
Based in: Dallas
Favorite grocery store: Truly, I can’t pick just one. Traditional: HEB. Experience: Jungle Jim’s. Indulgence: Dorothy Lane and Nugget Markets.
What do you see ahead for grocery trends? Personalized shopping such as promotions on pricing and free delivery. Unique experiences like cooking classes, magazines and videos. Technology and automation will reduce the cost of picking, inventory management, labor, procurement and analytics. Artificial intelligence will change the workforce, too.