A Grocery Store Merger Could Mean Major Changes to the Seattle Shopping Landscape

Two years ago, Kroger and Albertsons announced plans to merge into a single company, which would create the second-largest grocery retail chain in the country, behind only Walmart. Critics of the deal have argued that this consolidation would lead to higher prices and reduced pay and benefits for workers, and the Federal Trade Commission and state attorneys general in Washington and Colorado have sued the grocery giants in hopes of blocking it. In an attempt to get regulators to approve the deal, Kroger and Albertsons promised to divest from hundreds of stores to dilute their combined market power.

This week they came out with the list of 579 stores that would be sold to a New Hampshire–based company called C&S Wholesale Grocers, and it would have a big impact on the Seattle metro area. A whopping 124 stores in Washington — more than any other state — were on the list, including “nearly 70 in the Seattle area,” reports the Seattle Times. That includes 12 QFCs and three Safeways in Seattle, plus more, the paper says:

Other Seattle-area divested locations include five QFC stores in Bellevue, two QFC stores and three Safeway stores in Tacoma, two Safeway stores and two QFC stores in Kirkland, and three QFC stores and one Safeway store in Redmond. No Fred Meyer locations appear to be on the list of divested stores.

The primary concern for shoppers is that these stores will eventually close after being sold. C&S Wholesale Grocers, as its name suggests, is mostly a distributor, though it operates the Piggly Wiggly and Grand Union grocery chains.

“The divestiture plan ensures no stores will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading health care and pension benefits alongside bargained-for wages,” C&S’s strong operational focus coupled with its experienced management team and financial resources will position it to successfully operate divested stores for years to come.

Critics of the deal contend that C&S doesn’t have the resources or know-how to effectively run the spun-off Kroger/Albertsons stores and will have to close some — which is what happened a decade ago when Albertsons sold 146 stores to a chain called Haggen, which later filed for bankruptcy and sued Albertsons (unsuccessfully) for not providing support that it had promised in the deal.

In a February court filing, Bob Ferguson, the Washington attorney general, drew a direct comparison between the Haggen fiasco and the proposed sale of stores, writing, “C&S is not a sufficiently established and sophisticated competitor to restore the competition that will be lost if Kroger is permitted to acquire an established, successful competitor like Albertsons.” Ferguson also noted that “because this divestiture proposal disproportionately impacts Washington stores, the failure of this proposed divestiture would be particularly harmful here.”

Kroger and Albertsons have pushed back against the idea that the divesture would lead to closures or layoffs. “The divestiture plan ensures no stores will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading health care and pension benefits alongside bargained-for wages,” a Kroger spokesperson said in a statement. “C&S’s strong operational focus coupled with its experienced management team and financial resources will position it to successfully operate divested stores for years to come”.

But critics say that C&S has not committed to keeping open all the stores it will acquire over the long term. According to the Seattle Times, when C&S reps met with the United Food and Commercial Workers union, they “refused to affirm the earlier promise by Kroger and Albertsons that no locations would close as a result of the merger.” (C&S did not respond to a request to comment from Eater Seattle.)

There’s still a chance this merger may not become reality. There are several court dates coming up in the next several months, and the Times reports that some experts think that if the Federal Trade Commission gets an injunction temporarily blocking the deal, Kroger and Albertsons may just abandon it altogether.

Update 7/12, 4:13 p.m.: This story has been updated to include comment from Kroger.