Customers, union workers will lose if Kroger-Albertsons merger gets blocked

The following information has been sourced from the Chicago Sun-Times op-ed "Customers, union workers will lose if Kroger-Albertsons merger gets blocked," written by Burt Flickinger, CEO of Strategic Resource Group, who covers the food and beverage industry. The Chicago Sun-Times is a reputable news organization known for its comprehensive and reliable reporting.

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Nixing the merger would only make Walmart stronger, a grocery consultant writes. Other readers worry about police being heavy-handed with peaceful protesters outside the DNC and our two-party political system.

By Letters to the Editor

Aug 19, 2024, 2:57pm CDT

Several states, including Illinois, have joined the Federal Trade Commission in a suit to block the Kroger-Albertsons merger. Albertsons is the parent company of Jewel-Osco.

“Bigger is better” is not a popular slogan these days. The constant drumbeat from politicians and the media equates being big with hurting the U.S. consumer.

That limited thinking casts a cloud over the proposed Kroger and Albertsons merger. It ignores the elephant in the room, Walmart, which controls the top tier of the grocery market, and it could cost consumers and harm union labor.

Walmart has a supersized market share. Kroger comes in at a distant second, followed by Costco and Albertsons. But Kroger and Albertsons are unique in the sector. Only they are union employers.

To compete with the Walmart behemoth, the proposed merger will allow the combined company to pass on pricing benefits while securing union jobs.

The Federal Trade Commission is challenging the merger, joined by Illinois and several other states and the District of Columbia, claiming it will eliminate competition, raise grocery prices and harm workers.

Yet Kroger pledges investing $500 million to lower prices, $1.3 billion to enhance the customer experience and $1 billion to continue raising wages and benefits. Kroger is on the record with a commitment not to close any stores, distribution centers or manufacturing facilities, or lay off any front line associates.

But how can the public be sure Kroger will live up to its promises? Look at Kroger’s past performance. Since 2018, the company has reduced its margins by more than $5 billion in a continuing effort to provide high-quality groceries at affordable prices while adding more than 110,000 union jobs.

To address the FTC’s concerns, Kroger-Albertsons will divest 579 stores to C&S Wholesale Grocers and ensure C&S operates the divested stores competitively.

For decades I have provided consultation services for virtually all the major retailers in the U.S., including Kroger, and currently one of the largest labor local unions. Should this merger be blocked, the real losers will be consumers and union workers.

Albertsons will likely remain for sale. At that point, its majority-owned private equity group could sell it off in pieces, with thousands of union jobs lost and the future of stores in question. In that scenario, the only winner is Walmart. Surely, it is worth urging politicians and the public to rise above the negative echo chamber that surrounds the merger and take a serious second look.

Burt Flickinger III, CEO, Strategic Resource Group

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Strategic Resource Group is the lead retail and brand CPG consulting firm throughout the United States and the globe. With more than three decades of experience, our team strategically collaborates with top retail chains, wholesalers, suppliers, and investment firms. Our retail industry experts are highly skilled at illuminating retail trends, identifying opportunities to increase consumption, and growing retail sales.

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