A successful Kroger-Albertsons merger would mean the sale of West Vail Safeway

As Kroger and Albertsons continue to forge ahead on their proposed — and disputed — $25 billion merger, it has offered to sell additional stores to C&S Wholesale Grocers should the merger prove successful.

In Eagle County, the town of Vail is uniquely poised to be impacted by a successful merger. In the town’s West Vail commercial area, it has both a Safeway (owned by Albertsons) and a City Market (owned by Kroger) — located a tenth of a mile apart.

On the most recent divestiture plan, this Safeway is among the properties that would be sold to C&S, a nationwide company that owns Piggly Wiggly, Grand Union grocery chains and other brands.

Vail Town Manager Russ Forrest said the town has been curious and monitoring the potential and unpredictable merger, “particularly since the town of Vail is the underlying landowner for the City Market.”

Forrest added that the sale of the Safeway property was “interesting,” and could come with opportunities as the town evaluates the future of the West Vail commercial area.

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Not a done deal

The West Vail Safeway is one of 91 Colorado stores on the list of 579 stores nationwide that would be sold to C&S if the proposed merger goes through. In its divestiture plan, Kroger and Albertsons indicate that the divestiture plan will enable it to deliver on its merger commitments. Chief among these commitments is that there would be zero store closures and zero frontline jobs lost.

“We are also very excited to welcome thousands of highly skilled grocery retail, store and distribution team members from Kroger and Albertsons who are currently responsible for these supermarkets,” read a statement provided by C&S.

“Their knowledge, along with C&S’s wholesale and supply expertise, will ensure these stores continue to successfully serve their communities. C&S will recognize the union workforce and maintain all collective bargaining agreements. We are committed to retaining frontline employees and further investing in growth.”

 In the statement, C&S adds that “1918 Winter Street Partners, a subsidiary of C&S Wholesale Grocers, LLC will operate these stores.”

The sale of the stores to C&S is still hypothetical as the merger is being challenged by the U.S. Federal Trade Commission and other state attorneys general, including Colorado Attorney General Phil Weiser. Weiser sued to block the merger in February following his office’s investigation, which included town hall stops across the state including a meeting in Edwards in May 2023.

At the meeting, employees, grocery suppliers and consumers shared their concerns and thoughts about how the merger could impact their jobs, business and product availability and price.

“After 19 town halls across the state, I am convinced that Coloradans think this merger between the two supermarket chains would lead to stores closing, higher prices, fewer jobs, worse customer service, and less resilient supply chains,” Weiser said at the time the lawsuit was filed.

For Vail, the potential impacts of a successful merger between the two brands — as well as the sale of one of its grocery stores — harken back to why the town has two different chains to begin with.

“Historically, the interest was to have diversity and competition with our grocer. Originally we just had Safeway, and then through a partnership with the town, got City Market and Vail Commons, a housing project, with it,” Forrest said. “The interest was in having high-quality food opportunities that were at a competitive price.”

How could this impact the West Vail Master Plan?

In addition to the impacts of the potential grocer merger, the town has been actively discussing the implementation of its West Vail Master Plan. Approved by the Town Council in 2021, the master plan contemplates the future of the commercial core in West Vail where both City Market and Safeway stores are located.

“There are multiple scenarios that include complete redevelopment of the sites to how could you enhance the existing uses on the site,” Forrest said.

The Town Council had a preliminary discussion about implementing the commercial phase of the West Vail plan in February, and it is now part of an “active discussion” with Vail’s Planning and Environmental Commission, Forrest said.

Matt Gennett, Vail’s community development director, said that the town has presented the plan before the commission twice so far as it looks to get their feedback on the plan’s recommendations.

“We’re really trying to narrow down what their preferred uses are, what’s there today, what’s missing and looking at what the plan recommends,” Gennett added.

The 2021 Master Plan identified several possible scenarios to reimagine the commercial area in West Vail. These differing scenarios would have varying impacts on the grocery stores in the commercial area. However, retaining at least one grocery store was seen as critical throughout the master planning process.

In July 2021, during a public input session on the West Vail commercial area, 71% of the attendees said they’d like to see one large, full-service grocery store and one specialty foods store, and 21% said they favored leaving the two large grocery stores. In the framework for all the plan’s scenarios, this input is reflected.

“These scenarios show one major grocery store and one specialty store. While two major stores could remain in any redevelopment, having one major and one specialty store would create variety and allow for more space dedicated to other uses. If two major stores are included, their configuration and layout should align with the goals of the plan,” reads the plan.

Currently, the town’s discussions with the Planning and Environmental Commission have been centered on nailing down details for a new zone district, Gennett said. West Vail’s commercial center was initially developed under county rules and later annexed into the town of Vail under its “Commercial Core 3” zone district, Gennett added.

Generally speaking, the goal of a new zone district would be to “retain community-oriented commercial fixtures like grocery stores, hardware stores and laundromats,” while also creating incentives for new gathering spaces, business types and residential opportunities, Gennett said.

At the February meeting, the Town Council showed preliminary support for a scenario in which the town would initiate the first phase of development by redeveloping the town-owned City Market and Vail Commons property. As thought of in the plan, the redevelopment would leave space for a grocery store to remain, add housing options and enhance the property. The goal would be for this to catalyze private developers to also redevelop the other parcels in the area.

This scenario also includes several transportation and circulation improvements, but commercial improvements would come parcel-by-parcel.

While no decisions have been made, the master plan envisions that this scenario would see a “new, larger grocery store with residences above anchors West Vail Center.”

The plan also contemplates that after redevelopment of the City Market parcel, “the Safeway parcel can now redevelop with a different mix of uses and configurations.”

Gennett noted that the plan predates the Kroger-Albertsons merger and as such has no language in there that addresses it. While it makes recommendations around “consolidating into one larger grocery store space, it doesn’t speak to whether it should be a City Market or Safeway,” he added.

“There’s no brand affiliations here. We own the land under the City Market but that’s a long-term lease and we’re still committed to what is in the lease, but we’re relatively ambivalent in terms of whatever lands or stays there,” Gennett said.

Forrest added that if there was a transition in ownership, it remains to be seen what opportunities there would be to work with that property owner in concert with the master plan.

“There would still be an interest in having competition, having high-quality grocers, and could we work with that owner to enact the goals of the West Vail Master Plan,” Forrest said.

However, for now, Forrest said the town is “curious just like the rest of the community if there’s going to be a change there; it’s definitely an important use in the community.”