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2014 Archives

Grocery turf battles likely to lower prices

Excerpt

The following is from the March 14, 2014, edition of The Dallas Morning News. SMU Marketing Professor Ed Fox provided expertise for this story.

March 25, 2014

By MARIA HALKIAS
Staff Writer

The Tom Thumb or Albertsons in your neighborhood will probably have the same name above its door a year from now.

Inside, though, expect to see changes. Prices will be lower. Albertsons stores will do some things better as the combined companies share best ideas. Every effort will be made to keep Tom Thumb customers happy.

And No. 1 Wal-Mart and No. 2 Kroger will become even more aggressive in protecting their turfs.

Albertsons, owned by private equity firm Cerberus Capital, offered to buy Safeway, Tom Thumb’s parent company, last week. The deal would create the second-largest U.S. traditional supermarket chain behind Kroger. Albertsons offered $7.6 billion for Safeway’s 1,300 supermarkets, including 106 in Texas, and the deal is expected to close in the fourth quarter. . .

“Both Tom Thumb and Albertsons have been around a long time and are well-established here. All retail is local, and each chain has significant loyalties,” said Ed Fox, Southern Methodist University marketing professor.

Unless Albertsons want to cede the North Texas market to Wal-Mart, both the Tom Thumb and Albertsons names have to stay, said Fox, who has worked on grocery antitrust reviews. “Eliminating one of the two banners here would strike me as giving up.”

Based on the local market shares of Albertsons and Tom Thumb before the acquisition, which together is about 18 percent, “whatever antitrust implications there are don’t apply in Dallas,” he said.

Read the full story.

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