GLOBAL RETAIL & CPG CONSULTANTS

A Failed Albertsons-Kroger Merger Positions the Supercenter to Supersede the Supermarket

In February 2024, the Federal Trade Commission (FTC) sued to block the largest proposed supermarket merger in U.S. history—Kroger Company’s $24.6 billion acquisition of the Albertsons Companies, Inc.—alleging that the deal is anticompetitive. The FTC states, “The loss of competition will also lead to lower-quality products and services, while also narrowing consumers’ choices of where to shop for Groceries.”

A hearing is scheduled for July 2024 to decide the fate of the merger.

A Failed Merger Leads To Job Losses and Strikes Out the Union

While opponents believe that a merger limits competition and threatens to disrupt fair pricing structures, blocking the merger has far-reaching consequences for the food retail sector, union employees, and the overall strength of the United Food and Commercial Workers Union (UFCW), the Teamsters, and the BCTGMI (Bakers). Walmart, which now has 26% share of all comparable supermarket sales in the United States, is notorious for its anti-union stance; the retail behemoth has been accused of union busting in the past, and not one unionized Walmart store exists today.

If the merger fails, other typically non-unionized food retail giants including Target, Costco, ALDI, Trader Joe’s, and Amazon, which have joined Walmart in pricing out smaller food retail chains will also grow stronger. A Kroger Albertsons merger would create the first national supermarket chain, and therefore, better positioned to compete against these dominant and rapidly expanding non-union food retailers.

This information has been updated as of April 25th, 2024.

While UFCW membership has declined dramatically over the past 20 years, Kroger has been its shining light. During this time, Kroger has competed successfully in the marketplace and added union jobs. The merger will bolster the UFCW and its membership base.

Kroger’s deal with C&S Wholesale Grocers to sell 413 stores across the U.S. also ensures that no stores will close as a result of the merger, no frontline jobs will be lost, and all current collective bargaining agreements will be upheld. Announced in April of 2024, Kroger added166 more stores to the list of locations to be sold off to C&S Wholesale Grocers. With this update, 579 stores will be spun off to C&S. If the FTC blocks Kroger and Albertsons merger, the Goliath Walmart storms forward, and the Supercenter will successfully supersede the supermarket and union job losses will persist.

Kroger is a responsible corporation with a history of operational success. The company has a well-established legacy of taking care of the communities it serves, its employees, and its shoppers. Kroger has committed significant investment to lower prices.

Burt Weighs In: SRG’s Role in the Kroger-Albertsons Merger

SRG has followed and reported on Walmart’s retail dominance for more than a decade. A 2003 Pulitzer Prize-winning article series reported by the staff of the Los Angeles Times highlighted the impact of Walmart’s global economic influence. Strategic Resource Group’s Burt Flickinger was interviewed to discuss the retailer’s impact on union jobs and grocery chains.

Walmart erected its massive Supercenters in towns across the country to compete with smaller unionized grocery chains, wiping out the competition with lower costs and cheaper labor. Flickinger noted to Los Angeles Times that Walmart’s encroachment into the grocery sector with the introduction of its Supercenters either bankrupted or closed more than two dozen national grocery chains, eliminating 12K union jobs and leaving joblessness and devastation in its wake.

History repeats itself, and now two more chains fight to survive. Merging ensures a fairer fight against Walmart’s towering economic presence, and the impact of a failed merger translates to potentially unchecked growth for Walmart and more lost union jobs.