The proposed Kroger-Albertsons merger would create a grocery company to rival retail giants Walmart and Amazon. But will the tables turn if Amazon collects the two supermarket chains’ divested scraps?

As the merger plans advance, Kroger and Albertsons are looking to sell hundreds of stores to appease the Federal Trade Commission — and Amazon could have its eyes on them.

Insider reported earlier this week that analysts think Amazon should consider purchasing hundreds of the locations Kroger and Albertsons could divest, which would help the online retailer expand its presence in the brick-and-mortar grocery sector.

Insider quoted analysts at Bernstein who suggested that Amazon could buy some or all of the locations Kroger and Albertsons may potentially shed: “In theory, Amazon could plug acquired stores into its network, which would (potentially at least) prove less painful and costly than building a distribution and logistics network from scratch,” said one analyst cited by Insider.

RetailWire also noted that Kroger and Albertsons have stores that overlap in numerous large markets, including Chicago, the Pacific Northwest, Phoenix and Southern California. 

Amazon’s steps in expanding further into grocery have been far from linear lately. This year alone, Amazon has paused its expansion of Amazon Fresh to sort out how to better differentiate the banner and improve its economics. The company also cut hundreds of corporate Whole Foods Market positions earlier this month to restructure and reduced its operating regions from nine to six. 

Yet in a recent letter to shareholders, CEO Andy Jassy spoke confidently about growth in Amazon’s grocery sector — specifically in terms of bolstering the retailer’s physical presence in grocery.

“While we’re pleased with the size and growth of our grocery business, we aspire to serve more of our customers’ grocery needs than we do today. To do so, we need a broader physical store footprint given that most of the grocery shopping still happens in physical venues,” Jassy said in the letter. He added that, while Whole Foods is on an “encouraging track,” Amazon is still pursuing a mass grocery format that will work for the company. 

“Amazon Fresh is the brand we’ve been experimenting with for a few years, and we’re working hard to identify and build the right mass grocery format for Amazon scale,” Jassy wrote. “Grocery is a big growth opportunity for Amazon.”

What’s puzzling about this notion, however, is that Amazon has reportedly been removing Amazon Fresh signage from at least half a dozen yet-to-open store locations. So why the company is so eager to tack on more physical storefronts to their business is a question that cannot be clearly answered. 

In case you missed it

Portland food co-op closes after a half-century

Food Front Cooperative Grocer, a member-owned food store in Portland, Oregon, closed Monday after its general manager resigned, according to a letter to members from the grocer’s board of directors. In the letter, Food Front’s directors said they intended to give up their positions as soon as a new board is elected and recommended that the membership consider reopening the store with new financing and look into selling the co-op’s property. 

The closure, which the board said was “incredibly difficult and a long time coming,” follows Food Front’s disclosure earlier this month that its finances had deteriorated to the point that the co-op, which was founded in 1972, might not be able to stay in business, according to a report by The Oregonian. United Food and Commercial Workers Local 555, which represents workers at the Food Front, had called on the co-op’s directors and top managers to leave their positions and said it believed the co-op could return to financial health with new leadership, The Oregonian reported.

Walmart to bring health centers to Oklahoma

The retailer said Wednesday it plans to open healthcare facilities next to four supercenters in Oklahoma next year, bringing Walmart Health to the state for the first time. The facilities, all of which will be in the Oklahoma City area, will each occupy about 5,750 square feet and offer services including primary care, lab work, X-rays and dentistry.

In addition to entering Oklahoma in 2024, Walmart Health plans to expand during the year to Missouri and Arizona. Walmart already operates healthcare facilities in Arkansas, Florida, Georgia, Illinois and Texas.

Albertsons employee data compromised

An “unauthorized third party” broke into electronic systems used by the grocery chain to store sensitive information about its employees last December, according to an April 21 letter the grocer sent to employees affected by the breach. The letter was posted online by the Vermont attorney general’s office.

The intruder was able to infect the systems with malware and remove data, Albertsons said in the letter, adding that it has taken steps “to remediate the incident and prevent further unauthorized activity, and contacted law enforcement.” Albertsons said it would provide free credit-monitoring services to employees whose data might have been accessed by the intruder.

Number of the week: $16.5 billion

That’s approximately how much Albertsons recorded in private brand sales in its fiscal year 2022, per the company’s latest 10-K filing. The grocer noted that the sales figure is evidence that its own brand products “resonate well with our shoppers.” Albertsons also said it added 375 items to its private brands portfolio during the year. 

What’s ahead

Earnings galore

A trio of companies will update their investors next week. Sprouts Farmers Market will issue its results for the first quarter on Monday. On Thursday, Blue Apron will talk about its first-quarter financials and Natural Grocers will release its second-quarter results.

Newest jobs report

The U.S. Bureau of Labor Statistics is expected to release its preliminary data on employment in April next Friday. The data will include how many people were on food and beverage stores’ payrolls during that month. 

Impulse Find

Does Kroger have a new mascot? Henry, a pet squirrel who made an appearance on Kroger’s TikTok page earlier this month, sampled the grocer’s store brand veggie tray. Viewers quickly learn Henry is a fan of carrots and snap peas, but has some reservations regarding broccoli and celery. All the comments left on the video adore Henry as well as Kroger’s social media marketing. 

@kroger Henry loves his carrots. ????????️???? #kroger #vegetables #veggies #squirrel #feedingmypet #pettiktok @brittneealexus ♬ original sound - Kroger