With all the noise surrounding the Kroger-Albertsons merger, one would think that a Kroger spokesperson had recently announced plans for the grocery chain to shutter hundreds of stores or lay off thousands of workers. Nothing could be further from the truth.
As the federal hearing over Kroger’s proposed $25 billion acquisition of Albertsons draws to a close, it’s worth remembering that the deal is likely to enhance competition in the grocery market and benefit both consumers and workers.
Since the deal was first announced in October 2022, Kroger has been adamant that the merger would simply allow it to stay competitive with the nation’s largest grocers like Walmart. Kroger has also insisted that the deal would allow it to compete with the growing assortment of wholesale clubs like BJs and Cosco, discount grocers like Aldi and Lidl, specialty grocers like Sprouts and Trader Joe’s, and e-commerce giants like Amazon that are gobbling up a larger and larger share of the market. Despite characterizations of the deal as a “supermarket mega merger,” which would squash competition and create a monopoly in the grocery sector, a successful merger would only make the conjoined companies the third-largest grocery chain in the country behind Walmart and Cosco.
Even so, Kroger has gone out of its way to please the Federal Trade Commission (FTC) by promising to divest from any store deemed problematic. To date, Kroger and Albertsons have agreed to sell 579 stores in overlapping markets to New Hampshire grocery supplier C&S Wholesale Grocers. Divestiture plans of this scale have traditionally been enough for the FTC, so a rejection now would be perplexing. Moreover, C&S has seconded Kroger’s pledge to not shutter any stores or lay off any frontline workers—a persistent fear of critics. However, Alberton’s CEO Vivek Sankaran has stated that the company may be forced to do both if the merger fails.
Consumers would also benefit should the deal be approved. Kroger has stated that the merger’s efficiency gains and cost savings would allow it to invest $1 billion toward cutting grocery prices for consumers—up from a previous pledge of $500 million for this purpose. The merger would also allow it to expand its lineup of affordable store brands, providing shoppers with more choices, and spend an additional $1.3 billion on improving the customer experience. This is a far cry from speculative claims that the deal would lead to higher prices and worse customer service.
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Nate Scherer is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us at www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.