Thinking through Kroger’s $25 billion deal for Albertsons. Also: A subscription pilot for unlimited (great!) coffee in LA. And a simpler plan for Instagram commerce.
Kroger, the largest US grocery store operator, recently announced that it plans to acquire Albertsons, the second-largest. If the deal, valued at almost $25 billion, is approved — which is far from guaranteed — the combined business would run around 5,000 stores and employ more than 700,000 people.
This reminds me a lot of the telecom mega-mergers I was covering almost 20 years ago — the roll-ups that created national giants out of regional giants.
Grocery and telecom are alike in that they’re both very local businesses, with huge employee bases, real estate holdings, and complex, neighborhood-by-neighborhood operations. Running a national food supply chain (or fiber-optic network) doesn’t mean much if you can’t get the last mile right.
But grocery is quickly becoming a national business, too, as the internet gains more influence over the industry:
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