LAS VEGAS (KLAS) — The fierce competition to sell groceries in the Las Vegas valley has expanded as the population has grown, with Smith’s and Albertsons leading the charge.
In terms of stores in the valley, the two giants are nearly equals here, with 38 Smith’s Food and Drug stores and 31 Albertsons/Vons stores (nine of the stores are branded as Vons). It’s one of the markets in the western U.S. where the overlap is obvious.
The Friday announcement of a proposed merger, with Kroger buying Albertsons stock in an estimated $24.6 billion deal, could bring some changes to the valley. Some shopping centers that were built around Smith’s and Albertsons as anchor tenants are now without a major grocery store, with companies like Planet Fitness moving into the vacant spots.
Will stores close if they are competing for business in the same neighborhoods? Only time will tell. Friday’s announcement cases Albertsons as a “complementary” addition to Kroger’s presence, but the situations in each city will surely be evaluated in an industry that survives on sales volume.
A news release from Albertson’s hinted at one possible approach. “The two overlap in several markets, largely in the western part of the country. Their tie-up would involve spinning off up to 375 stores into a separate company.”
But the main reason for the proposed merger is to better position Kroger to compete with Amazon and Walmart. Kroger was quick to pivot during the pandemic, offering store pickup and delivery options. The battle to keep customers has turned more and more to convenience in recent years.
Everybody has to eat, but with inflation cutting into household budgets the stakes are high.
Popular stores like Trader Joe’s, Sprouts and Whole Foods have carved out niches here, and Winco has also expanded in recent years. Over the years, Safeway and Lucky stores have been absorbed as Kroger and Albertsons grew in Las Vegas. Raley’s and Glazier’s had short runs and Hispanic supermarket chains Mariana’s and La Bonita have thrived.
Big-box club stores Costco and Sam’s Club are a factor, but Walmart sells more groceries than Kroger and Albertsons combined.
Albertsons and Vons provide choice — the weekly ads delivered by mail show stark differences in week-to-week prices offered by Smith’s. Lately, Albertsons has had some better sales prices, but staple items are often quite a bit more expensive.
Smith’s and Albertsons have had higher prices on just about everything because of inflation and recent supply-chain fluctuations. Grocery prices jumped 13% in September compared to a year ago.