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Albertsons Sale May Leave Boise, Idaho, Without a Piece of Local History

Posted on: Monday, 3 October 2005, 21:00 CDT

By Melissa McGrath, The Idaho Statesman, Boise

Oct. 4--Longtime Boise resident J.M. Neil remembers talking with Joe Albertson as the grocer scooped ice cream for customers.

"We'd walk over from Boise High in 1954 or '55, and he was like the benign grandpa that would like to dip ice cream for the kids," said Neil, who is writing a history of Boise.

For Neil and many other Idahoans who grew up shopping at the first Albertsons store, the news that the company could possibly be sold or move away is "almost unimaginable."

"It's just like suddenly the world isn't the way it is supposed to be," Neil said.

Many local officials and community leaders agree that losing Albertsons Inc. would mean losing a piece of the city's history as well as potentially thousands of jobs and tax revenue.

In the last 66 years, Albertsons has transformed from a single family-owned store at the corner of 16th and State streets to the nation's second-largest grocery chain, with 2,500 stores in 37 states.

If Albertsons is sold, it doesn't necessarily mean the end of Albertsons in Boise. You'd still be able to shop for groceries at local stores. But depending on the new owners, Albertsons' headquarters could leave Boise.

That could mean up to 2,500 employees at its headquarters here could move with the company or join the ranks of those seeking jobs in the area or elsewhere.

Albertsons would no longer be a local franchise, and Boise would lose a piece of its history and its local economy.

While the future of Albertsons in Boise remains uncertain, its history as a large employer in the Treasure Valley and its role as a corporate citizen are clear. Here are seven reasons why Albertsons is an important part of the community and local economy:

Mike Ferguson, the state's chief economist, attributed some of the recent strength of the local economy to Albertsons' efforts to consolidate its company, bringing more workers to its Boise headquarters after it bought American Stores in 1999, and asking suppliers to open local offices in the last few years.

Since Albertsons announced it might sell, neither state nor city officials have studied what would happen to the local economy if Albertsons left. They said an analysis would be only speculation at this point.

What is known is that Albertsons paid nearly $11 million in state and local taxes last year, including more than $4 million in property taxes, according to figures provided by a company spokeswoman.

"You can't hear an announcement like that and not be worried," said Boise Mayor Dave Bieter. "It'd certainly be bad news if they leave. But until we have a little more information, it is hard to react."

Ferguson and other economists agree, even without studying the issue in depth, that the Boise economy would be hurt if Albertsons were sold or moved away.

"It would depend on the shape (Albertsons) takes," said Don Reading, a Boise economist with Ben Johnson Associates. "Specifically, the more layoffs there would be, the smaller (the company) would be and the less they would tend to purchase from area companies for supplies."

But if Albertsons chooses to sell only stores that are not profitable, it could boost the local economy because Albertsons would be a stronger company with more money, Ferguson said.

About 2,500 people work at Albertsons' corporate headquarters and its Intermountain West Division office on ParkCenter Boulevard. The future of those jobs remains uncertain while Albertsons' board of directors explores a possible sale of the company.

And if Albertsons is sold or leaves Boise, there would be a chain reaction. Employees in the local offices of some of the grocery chain's suppliers, like Pepsico, Sara Lee, Procter & Gamble and Dannon, likely will follow the grocery chain to its new headquarters. Efforts to reach local suppliers were unsuccessful.

Stores and restaurants in Boise also would feel the pinch.

"A rule of thumb is if you lose 1,000 jobs in the base, you lose close to 1,000 jobs in the retail sector as well," Don Holley, an economics professor at Boise State University, said when he first heard Albertsons' announcement.

That's because an unemployed person spends less money going to movies and restaurants and will probably decide to put off buying large items like cars, Holley said.

Having the corporate headquarters for Albertsons, Micron Technology Inc., W

ashington Group International and the J.R. Simplot Co. located in Boise gives the city "bragging rights," Ferguson said.

"The current situation is that Boise probably has more than a typical share, for its size, of major corporate headquarters," Ferguson said.

But the departure of a corporate headquarters has a greater impact on the economy and unemployment than on economic development, said Georgette Chapman Poindexter, who chairs the real estate department at University of Pennsylvania's Wharton School of Business.

"I think that if there is a skilled labor force, and the numbers work right in terms of what a company is looking for, whether Albertsons is there or not, is not going to make a difference," Poindexter said.

Still, some officials and economists worry Boise could become less attractive to these businesses if Albertsons left.

"It tends to diminish the ability to sell that this is a great place to have your headquarters and establish your business when you have those businesses leave," said Reading.

Bieter hopes that if Albertsons is sold, the new owners would want to remain in Boise. If the company does move, he believes the city would still be able to draw in other businesses because Forbes and Inc. magazines ranked Boise as one of the top 10 metropolitan areas in the nation for doing business.

Though real estate has been booming in the Treasure Valley, with home values up 26 percent in the first six months of this year, the market could take a hit if many of Albertsons' employees put their houses up for sale at the same time, economists said.

"It would put a lot of things on the market at once, and that would certainly have an impact," Ferguson speculated. "It would have a negative impact on the market for upper-end homes in all likelihood," he said, if many top Albertsons executives with high-paying jobs left.

But local real estate experts remained optimistic that the housing market could withstand any of the effects a possible Albertsons sale would have.

"There is a fairly significant demand for housing right now," said Alex LaBeau, chief executive officer of the Idaho Association of Realtors. "It might put a little dent in the market, but not anything significant."

More than 7,500 new and existing homes were sold in the Treasure Valley during the first six months of this year, a 26 percent jump over the number of single-family homes sold in the valley in the first half of 2004, according to the Intermountain Multiple Listing Service, which tracks area home sales.

"There is enough demand out there to absorb those houses," LaBeau said.

Keeping shareholders -- including those who live in Boise -- satisfied is at the heart of Albertsons' possible sale. The nation's second-largest grocery chain announced in early September it was looking for ways to increase shareholder value, including a possible sale.

Selling all or part of Albertsons would be a wise move "because the supermarket sector is under siege from Wal-Mart Supercenters," said Burt Flickinger III, managing director of the Strategic Research Group, a New York-based retail consulting firm.

Despite higher earnings and sales the company posted in the second quarter this year, Albertsons' sales still lag far behind those of Wal-Mart Stores Inc., the discount giant that has created fierce competition for grocery chains nationwide.

"If I were a shareholder, I would want something done," said Reading, the Boise economist. "It's got to be profitable or it can't be there."

If the company sold off its under-performing stores -- stores that cost more money to operate than they make -- it could likely increase its profits each quarter. "You make much more money selling them than running them," Flickinger said.

If the entire company were sold, a new owner might implement new strategies to cut costs, increase sales and turn a greater profit, analysts and economists said.

Talking about Albertsons inevitably means talking about one of Boise's most charitable corporate citizens. Founders Joe and Kathryn Albertson contributed to many Idaho charities, especially those involving education, and the company has tried to carry on that tradition.

Albertsons has helped by "giving to a lot of civic groups, whether it's the (YMCA) or the Boise Open," said Bieter.

"We have been a little spoiled in this community," said Jim Everett, chief executive officer of the Treasure Valley YMCA. He said he gets calls from YMCA officials in other parts of the country who are amazed at the amount of money raised locally.

"I don't think there is another community in the nation of this size that has benefited from the corporate citizenship in this way," he said.

Albertsons and the Albertson family, for example, donated $1 million, or about 8 percent of total dollars raised, to help build the West Family YMCA in the 1990s -- $500,000 from Albertsons Inc., $250,000 from corporate executives and $250,000 from Kathryn Albertson, Everett said.

Albertsons donated $2.5 million to charities throughout the Treasure Valley last year. Here are some of the other ways the company and family have helped the community:

--Albertsons has sponsored the Albertsons Boise Open golf tournament for 16 years, raising more than $4.5 million for local charities since then. The tournament raised $725,000 for local charities this year, a 25 percent increase over last year.

--Albertsons has donated about $1 million to the United Way of Treasure Valley every year. Last year, the company's donations made up more than 13 percent of the total funds United Way raised.

--Joe and Kathryn Albertson donated $35 million to the College of Idaho in Caldwell to help the school out of financial trouble and help build classrooms and an athletic center. To honor the Albertsons' contributions over the years, the college changed its name in 1991 to Albertson College of Idaho.

--The J.A. and Kathryn Albertson Foundation, which donates money to education in Idaho, had raised $244 million as of last year. The foundation is separate from the company and would stay if the company left, but it owns stock in Albertsons. A foundation spokesperson declined to comment on how it would be effected if the company were sold.

"They step up in a major leadership way in our community, and those kinds of companies Ñ you can't turn around and find another one," said Sally Zive, president and chief executive officer of United Way of Treasure Valley.

If Albertsons left Boise, the situation would be similar to when Ore-Ida Foods Inc., a subsidiary of H.J. Heinz Co., left in 1999, Everett said. It took several years after that company left for organizations like the YMCA and the United Way to make up the difference, he said.

"You hope someone or something else comes in," Everett said.

"It is just hard to imagine Boise without Albertsons," said Bieter.

Many locals agree that Albertsons is a Boise tradition.

"When you think of Boise and you think of Idaho, you do think Albertsons, despite the fact that retail grocery shopping has changed dramatically in the last decade," said Stan Olson, Boise School District superintendent. "Albertsons remains a stalwart and a place that is very defined in the hearts and minds of Idahoans, and particularly Boiseans."

Lin March, 60, is one such Boisean. She remembers shopping with her family at the first Albertsons store on 16th and State streets when she was a little girl, and she has remained a loyal Albertsons shopper ever since because it is a local, home-grown company.

"(Joe) Albertson worked all his life to build this store for people -- for Boise people -- and that is why the main headquarters is here. This is his home," March said. "And then somebody comes along and wants to sell it because times are hard?"

If the headquarters moved out of Boise, March said she probably would stop shopping at Albertsons and visit WinCo more often because it is locally owned

"It is just not local anymore," she said.

Albertsons has been important to Boise not only because it creates local jobs and is charitable, but because Joe Albertson set an example that other locals could follow, Olson said.

"He was an entrepreneur ... who brought the company from a single store to a national chain," he said. "The view for Idaho people is that one of their own could be recognized internationally as an entrepreneur and recognized business person, and then bring those benefits back to the community."

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Source: The Idaho Statesman, Boise

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