When the U.S. Federal Trade Commission pushed Kroger to back out of its massive merger with Albertsons, it blew up the grocery space.

Had the two chains combined, they would have been a credible rival to the buying power of national players like Walmart. Target and Costco. By not being allowed to join forces, the two companies were forced back into being regional grocery players — albeit very big ones.

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That cast a lot of rivals’ futures into doubt and made clear that competing would require a business model other than being as big as the national brands.

Players like Trader Joe’s, Aldi and Lidl can compete with unique merchandise and good pricing on limited items, but the big players would stay unchallenged. That forced a number of grocery chains to change their plans because they’d made decisions for a world in which the Albertsons-Kroger combination transformed the market. 

Albetsons itself did not take the Kroger decision well and sued its former potential partner for breach of contract.

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“A successful merger between Albertsons and Kroger would have delivered meaningful benefits for America’s consumers, Kroger’s and Albertsons’ associates, and communities across the country,” Albertsons’ Chief Policy Officer Tom Moriarty said in a news release. 

“Rather than fulfill its contractual obligations to ensure that the merger succeeded, Kroger acted in its own financial self-interest, repeatedly providing insufficient divestiture proposals that ignored regulators’ concerns.”

Basically, Albertsons charged that Kroger should have been willing to sell more stores to make the merger happen.

Regulators thought Albertsons-Kroger would be too big

The FTC wanted Kroger, the controlling partner in the proposed merger, to divest itself of some properties to ensure competition in more markets. That’s an oddly narrow view of competition in a space that includes Walmart, Target, Amazon and Costco, but the federal agency wanted to ensure more markets had multiple grocery options.

While all this was happening, rivals were making plans to operate in the new grocery world. In 2023, after the Kroger and Albertsons merger deal had been signed, Aldi shared a massive plan to expand in the U.S.

As part of that deal it bought Winn-Dixie and Harveys Supermarket as part of a larger divestiture of Southeastern Grocers to various entities. 

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“Despite many retailers shuttering stores due to economic conditions, Aldi is doubling down on expansion plans, supporting its position as one of the fastest-growing grocers in the country,” it said in a news release. “The Southeast-focused acquisition includes approximately 400 Winn-Dixie and Harveys Supermarket locations across Alabama, Florida, Georgia, Louisiana and Mississippi.”

That deal fell apart in less than a year and a group repurchased parts of the Winn-Dixie and Harveys empire.

Winn-Dixie loses stores

As part of the transaction, Aldi will close 220 Winn-Dixie stores and reopen them as Aldi locations. 

That’s a mixed blessing for customers: Some will see that as a positive while others will prefer the more full-service nature of Winn-Dixie to Aldi’s limited-selection-lower-price model. For fans of Winn-Dixie, it was a blow to lose more than half the chain.

Still, that’s better than the original plan, which included closing all Winn-Dixie and Harveys locations.

“A consortium of private investors, including [Southeastern Grocers’] longstanding supply-chain partner, C&S, acquired the Southeastern Grocers business from Aldi; Anthony Hucker, will serve as chair, CEO and president,” SEG said in a news release. 

“The consortium will immediately assume day-to-day operation of Winn-Dixie grocery and liquor stores and Harveys Supermarket, with prior agreed locations converting to Aldi through 2027.”

The new owners will continue to operate locations as they are being converted. Once they add the Aldi branding and reopen, control will be transferred. 

The process of closing the Winn-Dixie and Harveys locations has already resulted in about 50 closures and conversions.

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Under the new deal, about 175 Winn-Dixie and Harveys locations will be saved.

In addition to some 175 grocery stores in Alabama, Georgia, Louisiana, Mississippi and Florida, the new company will also own the existing Winn-Dixie liquor store business.