Kmart and Safeway 1998

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explorersea
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Kmart and Safeway 1998

Post by explorersea »

I saw another thread about a Sears and Safeway acquisition circa 2006, I never heard a whimper about a possible marriage with Sears. But I think I've been gone from the Red S long enough now to discuss there was indeed a buyout of Kmart being evaluated. Steve Burd was interested in purchasing Kmart, I know this because there was a POS running Kmart's POS software in the Safeway corporate office lab. This was around the time that Safeway was already busy renovating newly acquired Dominick's and we all know how that turned out. Safeway made the right choice in not pursuing Kmart, it would have been a disaster.
Last edited by explorersea on 04 Feb 2021 09:21, edited 1 time in total.
klkla
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Re: Kmart and Safeway 1998

Post by klkla »

This June 1999 article reports on rumors of Safeway being interested in KMart FWIW

https://www.latimes.com/archives/la-xpm ... story.html
pseudo3d
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Re: Kmart and Safeway 1998

Post by pseudo3d »

klkla wrote: 03 Feb 2021 20:47 This June 1999 article reports on rumors of Safeway being interested in KMart FWIW

https://www.latimes.com/archives/la-xpm ... story.html
I think I also read rumors of a Carrefour/Kmart merger.

The idea of Safeway pulling Kmart along would've been bad IF it was under "centralize everything" Burd AND if they hadn't tried to take over Dominick's Finer Foods and Randall's Food Markets in short order. Plus, discount store/grocery mergers have had a terrible track record, and the only one that could be considered a success was Jewel's acquistion of Osco in the early 1960s (and even then, Osco wasn't a true discount store--it's not like they did "Jewel Turn Style").
explorersea
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Re: Kmart and Safeway 1998

Post by explorersea »

explorersea wrote: 03 Feb 2021 19:37 I saw another thread about a Sears and Safeway acquisition circa 2006, I never heard a whimper about a possible marriage with Sears. But I think I've been gone from the Red S long enough now to discuss there was indeed a buyout of Kmart being evaluated. Steve Burd was interested in purchasing Kmart, I know this because there was a POS running Kmart's POS software in the Safeway corporate office lab. This was around the time that Safeway was already busy renovating newly acquired Dominick's and we all know how that turned out. Safeway made the right choice in not pursuing Kmart, it would have been a disaster.
This was during the time that grocers were trying to trying to get bigger and keep up while Walmart was beginning to dominate grocery, the Vons acquisition was going well, but the pivot to a big box variety store with fundamental issues like Kmart would have been difficult to pull off well
klkla
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Re: Kmart and Safeway 1998

Post by klkla »

It seems like the only synergy would have been on the distribution side because KMart didn't have a strong distribution network on the grocery side of the business and Safeway obviously did. This would have allowed KMart to try and catch up with WalMart at a faster pace.
pseudo3d
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Re: Kmart and Safeway 1998

Post by pseudo3d »

klkla wrote: 04 Feb 2021 16:24 It seems like the only synergy would have been on the distribution side because KMart didn't have a strong distribution network on the grocery side of the business and Safeway obviously did. This would have allowed KMart to try and catch up with WalMart at a faster pace.
It still would've been a hard sell as the Super Kmart area (which were scattered just about everywhere) wasn't lined up with Safeway's market area. Again, as it has been pointed out, by 1998, Safeway was wading into dangerous territory with the acquisitions of some regional grocery stores it had no business running. Even if they managed to put out the fires at Dominick's and Randalls that would erupt after they bought into them, Kmart would only be an expensive distraction.

On the other hand, the Safeway/Sears merger idea of 2005/2006 makes more sense from a retail perspective, being able to replace some of the Super Kmart sections with a Safeway (or its other brands) store-within-a-store or to open "Kmart departments" in some Safeway (or its other brands) stores, and SHLD at the time certainly had the money for it, the problem there was some abysmal leadership.
klkla
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Re: Kmart and Safeway 1998

Post by klkla »

pseudo3d wrote: 05 Feb 2021 08:42Again, as it has been pointed out, by 1998, Safeway was wading into dangerous territory with the acquisitions of "some regional grocery stores it had no business running".
A more accurate description would have been "some regional grocery stores it had no business ruining. The acquisitions should have been successful for them but they mismanaged them.
pseudo3d wrote: 05 Feb 2021 08:42
It still would've been a hard sell as the Super Kmart area (which were scattered just about everywhere) wasn't lined up with Safeway's market area. ... On the other hand, the Safeway/Sears merger idea of 2005/2006 makes more sense from a retail perspective, being able to replace some of the Super Kmart sections with a Safeway (or its other brands) store-within-a-store or to open "Kmart departments" in some Safeway (or its other brands) stores, and SHLD at the time certainly had the money for it, the problem there was some abysmal leadership.
Safeway operating within KMarts would not have worked because of union issues. Had this merger happened what I think you would have seen is KMart building more Super KMarts in markets that Safeway operated in and KMart would have expanded the grocery selection in their traditional stores in those same markets. Remember Kmart operated in almost every market Safeway did (but not vice versa).
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