Potential Kroger-Safeway merger could drive up Colo. grocery prices

LITTLETON, Colo. — Speculation was circulating Tuesday morning about a possible merger that could drive prices up at grocery stores across Colorado.

Industry insiders say Kroger, who owns King Sooper’s, is looking to buy out Safeway. The sale could change the way you shop, considering one company would control roughly 60 percent of the grocery market in Colorado.

In Littleton, both grocery stores are caddy-corner to each other at the intersection of Kipling and Belleview. In Colorado on the whole, there are 138 King Sooper’s locations and 124 Safeway locations.

One thing’s for sure: Safeway announced last week that the company is looking for a buyer, and Kroger is one of the strongest suitors at the moment, according to Darrin Duber-Smith, a marketing professor at Metro State.

“It would be a pretty epic merger in the grocery industry,” Duber-Smith said. “If you have one company controlling 55-60 percent of the market, they’re going to control pricing. And so the theory says the prices will go up and quality will go down.”

The U.S. Justice Department would have the final say in such a move, as a merger could spark anti-trust concerns and create a dominate franchise in Colorado.

“For shoppers in Colorado, it would probably be better that a private equity firm come in and operate (Safeway),” Duber-Smith said.

One such firm would be Cereberus Captial Management, which bought struggling Albertson’s in 2006. Safeway and Cerebus have also reportedly been in talks for months.

“Generally, the venture capitalists want to come in and say, ‘How we can organize this? How we can make this work?’” Duber-Smith said. “The other side of this is you get a company like Kroger that says ‘How can we knock out the competition?’”

Experts say a merger between Safeway and Kroger would raise red flags and fly in the face of the free market theory, which champions the fostering of competition and the avoidance of monopolies.

11 comments

  • Robert Winn

    Soome doom and gloom there… On the flip side a larger share of the market can also mean greater buying power, cost saving measures like shared warehouses, trucking etc. and a lower cost. Simply put there are not many places where a super walmrt, albertsons, etc. is just around the corner.

  • dougsmith42

    Safeway is a joke. Their prices are high, their employees are terrible. It would be a smart move for Kroger to buy them out, but in the end, the consumer pays more. This is one time the Justice Dept should step in to stop the monopoly. If there is a petition to stop this, somebody please post the details.

    • Valerie Sherman

      I work at Safeway. We have a very friendly staff up here in Williams, Az. Please consider that everyone who works at Safeway are not “terrible”. I love working, I like working at Safeway, I am grateful to be working at all, even at minimum wage.
      It’s not an easy job, but we smile through it, even at the jerks. Someone has to do it, might as well be me.
      I consider my job customer service and I’ll help you to the best of my ability, even if you’re grumpy.
      Please don’t clump everyone into a “category” until you walk a mile in their shoes.
      C’mon up, stop in..then head out to the Grand Canyon. I think you’ll be pleasantly surprised with our store.
      Crappy employees reflect crappy management and we have the privilege of being managed by outstanding people here.

      • Linda Dutton Young-Roberts

        I appreciate your comments Valerie. I retired from Safeway 8 yrs. ago after working for the company 36 yrs. It was a great company to work for and I enjoyed my job. My entire employment was in several stores within a retirement area. Not always easy customers to satisfy.
        The main focus was good friendly service. No not just good service but excellent service as best we could. The company treated me well and in return I was a loyal employee and did all my shopping with the company that signed my paycheck. I realize things change but for me it was a good company to work for. I also agree good management makes for good happy employees with good attitudes.

    • Erica McCusker

      I feel very sorry for you that you are actually looking forward to driving for Kroger/KS.
      Take a little trip down to the KS plants (meat, bakery or trucking yard) off of Yuma (Knox exit off of 6th) and talk to some of the people that actually work for them. Heck, you can even talk to the people at the KS stores and you wont hear many (if any) kind words about working for them other than “it’s better than not having a job”.
      The closer you are to retirement age the quicker they try to get you out, good luck keeping your job if you ever get hurt (OJI) badly or have medical problems (ten times worse if you are close to retirement age), poor contract negotiations (strikes all the time), and they have the local union halls in their pockets that fight on the side of the company instead of the worker.
      If Safeway gets bought out by Kroger, run screaming to anywhere else but them!

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