This is a classic consolidation play that makes reasonable sense. Grocery and pharmacy are a natural combination and I expect that there will be lots of opportunity to rationalize expenses and streamline the merged entity. But while conceptually this all makes good sense, whether this will be successful or not will come down to how management executes. Not only will integration take time, it will be extremely complicated given the size of the respective enterprises. Ultimately, a successful combination will be good for consumers by providing a broader product offering, neutral for vendors and bad for competitors.

It makes sense to put these two together, but the merger took a long time to do. Unfortunately, during that time, the competition had a chance to do something different. With CVS buying Aetna and Amazon getting into health providers, this merger has a tough integration ahead of it.

While distribution and breadth of stores will help, this integrated group is going to have to solve how to deal with CVS/Aetna and Amazon/Berkshire/JPMorgan, while figuring out how to actually integrate Albertsons and Rite Aid into a single entity.

The negative is that it will hurt competitors and, as Mark says, it will take a long time to achieve. The positive is that this merged company can become a dominant entity operating synergistic businesses feeding each other’s customers.

It’s a logical combination of categories, although neither Albertsons nor Rite Aid would be considered “best in class” as separate entities. CVS has greater strength in pharmacy benefits management.

As to the food side of the business, Albertsons has many of the same challenges as its traditional rivals like Kroger: Are they ready for the impact of Amazon, the continued growth of Walmart and shoppers generally turning away from middle-of-the-road retailers?

The positive is that it allows both players on the supermarket and drug sides of the business to enhance their impact in the market. However, it can’t be viewed in terms of the increased number of locations (stores and clinics). To be successful, the merger must enhance the lives of its respective customers. The key is a true integration of services rather than bolting on pharmacies to food retail. Time will tell if this is a real estate deal rather than a marketing deal.

Albertsons/Rite Aid will compliment each chain — having a brand name pharmacy in each Albertsons and a draw for Rite Aid in each Albertsons. Their rewards systems will also be combined which should leverage additional customer interest. However, they should look at lessons learned at Target when CVS customers did not like the fact that the new pharmacies were located inside Target stores. The combination will help consumers that trust Albertsons/Rite Aid and allow one-stop shopping for groceries and pharmacy. It is also likely to set off further consolidation in the grocery/pharmacy market.

There are several ways to look at this merger in a positive light, including real estate and interesting store format potential, expanded health and wellness opportunities and sheer volume. But there are a few negatives, including geography (it doesn’t give Albertsons full nationwide coverage) and e-commerce (neither retailer has a fully-baked offer).

I went to Albertsons this weekend. The shopping experience was abysmal and I walked out with only a loaf of bread. From our customer data, my experience is not uncommon.

So sure, this acquisition will boost sales and profits, but it will not remedy the weaknesses inherent in other parts of the business. It is an exercise in masking problems, not solving them.

Beyond finding synergistic savings and seeking out some common-sense sales opportunities, I am not sure this deal is all that exciting. I certainly don’t buy the narrative that it allows the company to become “a truly differentiated leader.”

Indeed, Albertsons once had pharmacy expertise from both Osco Drug and Sav-on Drugs — however, it sold most of the stores to CVS. This deal just brings it back full circle.

This new combination would have scored even higher before we entered the CVS-Aetna era. I view this as a good first step in a sequence of mergers and acquisition that establishes a solid foundation for a combined food and drug player.

I expect Cerberus Capital to make a second move to elevate delivered value and to level the playing field with CVS and any future moves by Walmart that take advantage of existing scale, while creating greater leverage for future drug costs and benefits.

I think I get the financial motivation behind this deal, but it’s going to be a long slog for the merged company, I suspect. Rite Aid has been a distant number-three in the chain pharmacy business for years. Adding the supermarket pharmacy locations will fill in its footprint significantly (especially in Chicagoland), but it won’t quickly create the unified banner visibility of a CVS or Walgreens.

From the Albertsons/Safeway/Vons/Jewel-Osco/Star/Haggen/etc. side of the equation, there’s the challenge of too many banners, now about to be made more complex.

With those issues understood, this merger still seems like a creative way to challenge the hegemony of CVS and Walgreens. Rite Aid had no other apparent path to rapidly close that gap. Albertsons may view this maneuver as a way to pressure Kroger in sheer scale and score more higher-margin Rx business.

A cool 3D business chess match is happening here, but to me, the shoppers look like the pawns.

This is a very logical and complimentary combination designed to address an ever increasingly competitive market in both grocery and pharmacy. For both Albertsons and Rite Aid, there are many operational efficiencies and optimizations to be had with this merger. But the key to success lies in the execution. Competitors are not standing still and some, like CVS, are already moving ahead in their own direction. Albertsons and Rite Aid will need to move quickly and decisively to execute well or all the benefits will be overshadowed by competitors’ achievements.

Smart move. The combination will strengthen the company’s negotiating power with manufacturers, better position them versus competition and has potential to better ingrate them with shoppers. It also positions Albertsons to enter many new markets based on the Rite Aid footprint as well as shore up their heartland.