It’s been a while since Kroger first announced its acquisition of Albertsons in October 2022. The acquiring firm has already agreed to sell 413 stores to avoid local monopoly complaints from the Federal Trade Commission (FTC), with 237 other stores slated for dispatch if required by regulators. While this should address concerns from the FTC regarding the merger’s effect on competition, union-dominated “listening tours” have revealed anxiety around the potential for store closures and layoffs. Lacking in this conversation is how the merger could turn around Kroger’s recent market share decline, improving competition, consumer prices, and employment.
A key component of antitrust compliance is the assurance that monopolies are not created due to a merger. In the retail store market, local communities usually have a few different options for where to do their shopping. If a merger results in only one company controlling all the supermarkets in a community, this could be seen as a local monopoly. However, this may change in the era of online shopping and cost-efficient delivery. For the time being, nearly 90 percent of customers still do their grocery shopping at supermarkets.
To avoid situations where Kroger-Albertsons stores could present a local monopoly, they have agreed to sell stores (distribution centers and private label brands) to C&S Wholesale Grocers. Even though these sales are at the behest of the FTC, it has not stopped the agency’s public meetings with union members from blaming Kroger instead. The irony becomes even more palpable when considering Kroger is unionized while its primary competitor, Walmart, is not.
The short-sightedness of preventing the merger based on the potential for near-term market shuffling ignores how the merger could improve Kroger’s declining market share. From 2021 to 2023, the grocery market share fell from 12.1 percent to 10.7 percent. Out of the top 10 largest grocers, Kroger has seen the steepest decline, while stores like Walmart have increased their share from 23.7 to 24.2 percent. With a weak quarterly report, Kroger is not looking to acquire Albertsons out of greed but out of competitive necessity.
According to the FTC, the results could be an improved national competition between grocers, which, “beneﬁts consumers by keeping prices low and the quality and choice of goods and services high.” Such an outcome would benefit consumers as larger chains like Walmart are forced to cut costs to compete with a more competitive Kroger.
Furthermore, grocery store unions should consider the long-term ramifications of blocking a beneficial merger that could have improved Kroger’s marketability. As it stands, poor quarterly earnings could easily slide into layoffs and foreclosures. If economic vitality continues to slow down, Kroger employees who rely on the union to represent them might be concerned about their jobs.
It remains to be seen if the FTC can move past its bias towards intervention and allow the acquisition to occur. It would be in the interest of consumers, competition, and employees if it did.