Real Estate

Kroger-Albertsons Merger to Close 28 Texas Stores, 26 in DFW

Kroger-Albertsons $24.6B merger to close 26 DFW stores, sell 579 nationwide to C&S Wholesale Grocers.

By Doug Elli

7/10, 16:53 EDT
Albertsons Companies, Inc., Inc.
Costco Wholesale Corporation
Kroger Company
Walmart Inc.

Key Takeaway

  • Kroger and Albertsons' merger will result in the closure of 28 Texas stores, including 26 in DFW and 2 in Houston.
  • The deal involves selling off 579 stores nationwide to C&S Wholesale Grocers, pending FTC approval next month.
  • The closures highlight ongoing consolidation trends in the grocery sector, impacting local retail landscapes.

Major Grocery Store Shakeup in DFW

The Dallas-Fort Worth (DFW) area is bracing for a significant shift in its grocery landscape as Kroger and Albertsons prepare to merge, pending regulatory approval. This merger, valued at $24.6 billion, will necessitate the closure of 28 stores in Texas, with 26 of these located in DFW. The closures are part of a broader divestiture plan involving 579 stores nationwide, which will be sold to C&S Wholesale Grocers. This move is aimed at addressing antitrust concerns and maintaining competitive balance in the market.

Details of the Divestiture

The divestiture plan includes a mix of Albertsons, Tom Thumb, and Market Street locations in DFW, along with two Randalls stores in the Houston area. The stores will be sold to C&S Wholesale Grocers, which has committed to continuing operations and retaining employees under existing pay and health plans. The divestiture also includes non-store assets such as a dairy plant in Colorado and six distribution centers. This comprehensive package is designed to ensure that C&S can operate competitively post-merger.

Impact on the Local Market

The DFW market, known for its robust retail sector, will see a significant reshuffling of grocery store ownership. Despite the closures, the overall availability of "daily-needs" retail space is expected to remain stable. This stability is crucial as brick-and-mortar stores continue to hold their ground against the rise of digital retail. The merger aims to create a stronger entity capable of competing with larger, non-unionized rivals like Amazon, Walmart, and Costco. Kroger and Albertsons have pledged substantial investments to cut prices, raise worker wages, and improve store conditions.

Broader Implications for the Industry

The merger and subsequent divestitures highlight the ongoing consolidation trend in the grocery industry. The Federal Trade Commission (FTC) has raised concerns about the potential negative impacts on competition, prices, and employee wages. However, Kroger and Albertsons argue that the merger will enhance their ability to compete and provide better services to consumers. The FTC's skepticism about C&S's ability to integrate the acquired stores adds another layer of complexity to the situation. Historical precedents, such as the failed divestiture to Haggen Holdings in 2015, underscore the challenges of such large-scale transactions.