“We’ve seen incredible consolidation among food retailers over the last 20 years,” said Stacy Mitchell, the co-executive director of the Institute for Local Self-Reliance. “And it’s only accelerated, and in time, as companies have consolidated market power, they have driven groceries and small chains out of business.”
The result could hurt independent grocers that disproportionately serve rural small towns, and low-income communities, as well as Black and Latino neighborhoods, Mitchell said.
Together, Kroger and Albertsons employ more than 710,000 people and operate a total of 4,996 stores, along with thousands of pharmacies and gas stations. The two chains include other well-known brands such as Roundy’s, Fred Meyer, King Soopers, Mariano’s, Pick ’n Save, along with Ralph’s, Safeway, Vons and Jewel-Osco.
Combined, they would control 13% of the U.S. grocery market, according to the Associated Press, which cited J.PMorgan Chase analyst Ken Goldman. Walmart, by comparison, claims a 22% share.
Kroger said it would reinvest about $500 million into price reductions, and spend $1.3 billion updating Albertsons stores and $1 billion on higher employee wages and improved benefits, according to an official statement from the company.
“Kroger has a long track record of lowering prices, improving the customer experience and investing in its associates and communities,” the statement read.
The merger’s announcement comes after food prices rose 13% in September compared to last year.
Maureen Tkacik, a senior fellow at the American Economic Liberties Project, noted that restaurants aren’t experiencing the same kinds of increases.
“The gap between the 13% inflation inflicted by grocery stores vs. the 8.5% imposed by restaurants is a staggering 4.5 points,” Tkacik wrote in a Twitter thread breaking down the merger.
“Albertsons and Kroger already have extraordinary power over suppliers and they will gain even more power through this merger,” Mitchell said. “What they do with that power is strong-arm suppliers to give them better prices while raising prices that they charge to the wholesale independent grocers … it’s just a recipe for more (independent grocers) going out of business.”
According to Mitchell, the people growing the food aren’t seeing those profits, either.
“Grocery prices have been rising and farmers and people who work in food processing are getting a smaller and smaller share of food dollars,” she said. “Where’s all this money going? It’s going into the pockets of retailers.”
The United Food and Commercial Workers union issued a joint statement Thursday calling the merger “devastating for workers and consumers alike.”
“This proposed merger of two of the largest grocery companies in the nation will no doubt create a monopoly in the grocery industry for many communities, with one company owning a $47 billion market share,” the statement read, in part.