Locals Eye Albertsons Options

LOS ANGELES — The imminent shutdown of 19 Albertsons stores in Southern California — and the possible availability of all of Supervalu [4]’s 200-plus California stores — has local retailers considering their options.

Among the possibilities, according to local sources:

• Independents, including operators of Hispanic-owned stores, could buy some of the locations.

• The locations could go to dollar stores or to new licensees of Save-A-Lot, which has a very small base in California.

• A private-equity firm could acquire the entire Albertsons chain and become a major player in Southern California or else sell the stores to a variety of buyers, which could include the major Southern California chains.

Supervalu said earlier this month it plans to close 60 underperforming or non-strategic stores by the end of November, including 38 traditional supermarkets — encompassing 19 Albertsons in Southern California and eight in the Intermountain West region; four Acmes in the mid-Atlantic region; and one Jewel-Osco in Indiana — and 22 Save-A-Lots, mostly in Alabama, Georgia, Oregon and Washington.

Industry observers told SN the 19 Albertsons stores that Supervalu is closing in Southern California definitely fall into the “underperforming” group. 

Some observers said likely buyers could include Southern California independents that primarily serve the Hispanic community. “Some of the stores that are closing are in areas that could be considered Hispanic — though many of the Hispanic-owned chains do a good job serving Anglo customers, so this could be an opportunity for them to branch out,” one local source said.

However, others said it’s also possible new operators could enter the market, using Supervalu as their supplier — possibly a dollar-store operator or new Save-A-Lot licensees. There are only a handful of Save-A-Lots in California.

Read more: Albertsons Store Closings Identified [5]

Besides the 19 stores scheduled to close here, local sources said Supervalu is also making available a list of its 200-plus California stores. Supervalu previously said it was considering the sale of all or part of the company as it seeks to raise funds to invest in its other operations.

That could open the door for a private-equity firm to enter the market, sources suggested — someone like Cerberus Capital Management, New York, which formed a partnership with a real-estate company in 2005 to acquire some of  the underperforming Albertsons stores when the original chain was broken up and subsequently sold those stores to various retail operators.

The availability of so many stores at once may prompt a legal challenge by the United Food and Commercial Workers Union if a non-union operator buys some of the Albertsons units and wants to reopen them without the union, observers here pointed out.

Read more: Supervalu Names Persian as CIO [6]

Four California cities — three in Southern California (Los Angeles, Santa Monica and Gardena) and San Francisco in Northern California — have passed laws that require a new owner to retain existing workers covered by a union contract for a minimum of 90 days, after which workers must undergo a written performance evaluation to determine possible continued employment. That law was upheld a year ago by the California Supreme Court; a decision on whether to appeal the matter to the U.S. Supreme Court is under consideration.

But the clock is ticking on any quick transactions, observers pointed out: Since retailers usually don’t like opening stores during the holiday season — and since customers don’t like to deal with changes in a store during that period — any Albertsons that aren’t sold by late October would likely be closed through early next year, they said.

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