Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran were credited as co-writers of an opinion piece in the Cincinnati Enquirer that argued in favor of the proposed $24.6 billion acquisition of Albertsons by Kroger, which would merge the assets of the nation’s second and fourth largest supermarket chains.
The letter observes that “the landscape is competitive and ever-evolving. That’s why we strive to do better − delivering lower prices and more choices faster. And that is what excites us about our proposed merger.
“Since we announced the merger, we have seen many misconceptions about it. We would like to correct a few of these and share the meaningful, measurable benefits the merger will bring to customers, associates and communities.”
The op-ed piece focused on disposing of several “myths” about the merger – that stores will close, people will lose their jobs, and groceries will become more expensive:
• “As a part of the regulatory process, we anticipate divesting − or selling − some stores,” the piece says. “These stores will remain open. We are working closely with the regulators and are committed to finding reliable operators for the divested stores.”
• “We value and respect our associates and would never move forward with this combination if it could risk their careers. No frontline workers will be laid off as a result of the merger. The combined company will have one of the largest unionized workforces in the country. We are committed to protecting and expanding opportunities for union jobs.”
• “Customers look to us to provide high-quality, affordable groceries − particularly today. At Kroger, our business strategy is to lower prices year over year, attracting more customers and earning their loyalty. In fact, Kroger reduced its margins by more than $5 billion since 2018, while growing customer counts.
“We have seen claims we will lower prices by squeezing farmers. This is simply not accurate. Farmers are the backbone of our business and help put fresh, affordable food on families’ tables daily. When we grow, farmers grow with us.
“As a combined company, Kroger and Albertsons will be even more customer focused. We will offer lower prices and more choices on products customers want, need and love.”
KC’s View:
Some of this is – I won’t go so far as to say wishful thinking – beyond the companies’ control.
Sure, stores may be divested as opposed to close. But that doesn’t mean the new owners, whoever they may be, will be able to make them going concerns. If they can’t, people will lose their jobs.
At the same time, it is a little hard to persuade people that grocery prices won’t go up as a result of the merger when all people have seen lately is higher grocery prices.
Some of this is optics. Some of this, as I said, beyond their control.
At the end of the day, the argument that Kroger and Albertsons are making is that they need this deal to be approved so they can better compete with Walmart and Amazon. The Federal Trade Commission (FTC), it seems to me, will have to focus on whether their ability to compete with Walmart and Amazon is more important than the competitive disadvantage that this deal likely will put other, smaller retailers at.
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