Albertsons Could be Taking Over Whole Foods

Albertsons to Buy Whole Foods Inc.
Mandatory Credit: Photo by Alex Sudea/REX/Shutterstock (4610604cb) Whole Foods Shop signs, Los Angeles, America - 04 Apr 2015

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* Albertsons in talks to buy Whole Foods, according to report
* Also potential merger between Albertsons and Sprouts Farmer Market
* Whole Foods Inc. undergoing strategic plan for growth in response to decreased sales

According to a new report from The Financial Times, the owner of Albertsons is considering plans to buy Whole Foods. This news comes just a month after reports surfaced that Albertsons was also in talks to arrange a potential merger with Sprouts Farmer’s Market.

But the most recent report seems to suggest that Albertsons is still shopping around for the right match. The story reports that according to anonymous sources, the company in charge of Albertsons and Safeway– Cerberus Capital Management–has recently spoken with bankers about making a bid for the upscale grocery retailer.

Albertsons planned to go public back in 2015 but has struggled to maintain competitive in the grocery store market. The grocery store industry has, as a whole, has been on shaky ground in the last couple of years, thanks to convenient home delivery services growing in popularity, in addition to food deflation and steeper price competition.

Organic grocery retailers have also taken a hit in the rapidly changing market. Conventional grocery stores including Vons, Ralph’s, Walmart and Safeway, have begun offering organic and specialty products in their supermarkets, making it more difficult for organic grocers like Whole Foods and Sprouts Farmers Market to maintain their high-end prestige and maintain stable sales growth, when consumers can find all of their household and grocery needs under one roof elsewhere.

Last year, Whole Foods tried to tap into a younger market, opening a smaller, more budget-friendly grocery store in Los Angeles’s Silver Lake neighborhood called “365.” The smaller store was aimed at a younger audience with more affordable price points and a smaller selection of merchandise. The store’s appeal didn’t quite catch on as the retailer had hoped, resulting in initial plans to open additional stores being stalled for the time being.

Whole Foods is also reportedly planning to shut down nine stores in California as a part of their more strategic growth plan. But despite decreased sales, “Whole Foods is still the envy of the grocery industry,” supermarket analyst David J. Livingston tells the Los Angeles Times.