Albertsons gets reunited

albertsons.jpgOne of the stranger corporate deals took place a few years back when the supermarket chain was split into two, with one buyer, Supervalu,taking over more than 500 locations, many of them in Southern California, and the other buyer, private equity firm Cerberus, acquiring the remaining stores, many of them second- and third-tier. A single chain that's operated separately by two different owners - not the ideal arrangement and one that comes to an end with Supervalu selling its Albertsons markets, along with several other chains, to Cerberus for $3.3-billion. This is a complicated deal involving different investment groups and financing arrangements, but the transaction, boiled down, is a reminder of why traditional supermarket chains have been struggling so much. They've being pummeled from all sides - big box chains, membership stores, and small, niche-type markets - while having to maintain higher operating costs because of union contracts. Last summer, Supervalu announced that it would close 26 of its Albertsons markets, including 18 in Socal. The industry isn't quite as desperate as newspapers, but it's getting there. From the LAT:

"The traditional grocery store is something of a dinosaur. The core question is whether it can be reinvented and re-created or whether we have to have a lot fewer of them," said Jim Prevor, a food analyst at, a website that follows the fresh food industry. Supermarkets' share of the $800-billion market for food eaten at home shrank to 64.5% in 2010 from 72.1% in 2000, according to Moody's Investors Service. The falloff has been particularly acute in Southern California. In 2004, the top four chains -- Vons, Ralphs/Food 4 Less, Albertsons and Stater Bros. -- controlled about 60% of the region's market share, according to research firm Strategic Resource Group. As of March 2011, that had shriveled to a 35.9% share of the market, with Albertsons accounting for 8.1%.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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