You may have heard by now that the second largest grocery chain in the country (after Kroger) is in talks with a potential buyer. The announcements have been coy about the identity of the potential buyer but speculation has centered on Cerberus Capital Management, a private equity firm that bought 600 Albertson’s stores in 2006, and pared the lot down to 200 over the next seven years.
Safeway, headquartered in Pleasanton, is the fifth-largest employer in the East Bay and currently owns 1400 stores. It has already divested itself of 213 stores in Western Canada and is in the process of unloading 72 Dominick’s stores in Chicagoland, apparently getting itself in shape for a sale. Safeway is being closed-mouthed about negotiations as would be expected. The United Food and Commercial Workers, which represent Safeway employees, are posting updates on their website, as available. Cerberus was involved in a similar takeover of the Albertson’s chain in 2006 which , according to the Union, “did not go well”. If any stores are closed, you would expect them to be stores in low-income areas or historically unprofitable stores. Considering the long distances between the North Coast stores (Crescent City, McKinleyville, Arcata, Eureka and Fortuna, with Eureka already converted one store to a VA Clinic) one would think the remaining stores were safe, but who knows?
Traditional grocery stores have come under intense pressure from competitors such as WalMart, Dollar General and on the other end of the spectrum, Whole Foods. Kroger’s reported a 3% growth for the first three quarters of 2013 while Safeway showed less than 2%. Whole Foods reported 5%, which if you’ve shopped in their stores explains their nickname, “Whole Paycheck”.
Let’s hope that things go smoothly and well for our friends and neighbors who work for Safeway. Change happens but hopefully this will be positive change.