Kroger and Albertson Should Not Merge
A tale for the average citizen: food deserts, high prices, and no options for those with dietary restrictions
At first glance, the Kroger/Albertson's Companies Inc. merger looks harmless, but frankly, a lot could go wrong. Why might these two major grocers be joining forces in the hope of bettering their businesses be more harmful than positive for society? To find out, a deep dive must be taken.
Upon further examination, this merger will negatively impact Americans through the limits placed on grocery stores per capita. The Kroger/Albertsons Companies Inc. merger should not go ahead. By limiting the number of grocery stores in a given area via closures, this merger will disproportionately hurt those in food deserts and those with specific diets. The consequences of this merger will negatively impact the average American consumer and harm the vulnerable and food insecure.
On October 14, 2022, Kroger announced (Kroger, 2022) their merger with Albertsons. For context, in the United States, Kroger is the largest supermarket chain by revenue (SNS, 2021), and Albertsons is the third largest supermarket chain by revenue (Farfan, 2019). In their official announcement, Kroger proclaimed several reasons why this merger is optimal. One of Kroger's first points is that together, these grocery store chains will be able to expand their network. While this is true because they will physically have more stores across the country as they expand, it does not address that the merger will lead to a decrease in stores per capita. They will be closing some of their current stores, as will be further explained.
In a Wall Street Journal article (Kang, 2022) published on October 21st, the Kroger/Albertson anti-trust review is brought up. It says that the move to decrease stores per capita to lower store overlap and competition is likely to be the main issue discussed. Benjamin Dryden, a partner at Foley & Lardner LLP, clarified store overlap. According to Mr. Dryden, store overlap is when there is a radius of two to 10 miles from one grocery market to another, excluding discount stores. Furthermore, in an initial assessment, Kroger and Albertson agreed to close up to 650 of its stores, further perpetuating the existence of food deserts.
This is a cause for concern, as many customers have mentioned in the comment section of an article (Siegal, 2022) from October. One example of how this decision will disproportionately affect customers comes from Jay Siegal. Mr. Siegal, hailing from Houston, Texas, is an orthodox Jew who keeps strictly kosher. In his depiction of the events that will transcribe if the merger goes through, he speaks regarding the local Kroger and Randall’s (owned by Albertsons), which are only a mile apart in his community. He said there is a 50/50 chance that Randall’s, the only store with Kosher options in the area, would close. If the merger leads to the closure of Randall’s, then both Mr. Siegal and his Jewish community will be left with fewer options. One can also conclude that Mr. Siegal is not alone in his concern. There is a wide variety of people with food restrictions that store closures will affect. Muslims, Hindus, vegans, vegetarians, etc., will also have difficulties with their dietary restrictions.
Having fewer stores is only part of the problem. The merger may also exacerbate the critical issue of food deserts. Food deserts (Dutko, Ploeg, & Farrigan, 2012) typically have low-income residences, little access to transportation, and only a few options for food retailers at affordable prices. It further mentions how Kroger and Albertsons will likely choose “lower-performing stores to divest” in, which are more likely in food deserts. As the Institute for Local Self-Resilience co-founder, Stacey Mitchell, says, “It increases the risk that communities will become food deserts,” and “this is a bad deal, and it should be blocked by the FTC.”
Although this deal is potentially problematic for many, it could benefit some. Kroger did pledge to reduce food costs (Bomey, 2022) after the merger was completed. Although Kroger touts to reinvest 500 million dollars to lower prices for customers, many are skeptical for four main statistical reasons (Allyn, 2022); grocery prices are up 13% compared to a year ago, dairy products rose by 15.9%, cereal, and baking products by 16.2%, and eggs are up 30%. These price increases continue to harm the average American consumer. Wages are rising slower than grocery prices, with wages unable to keep up with inflation for the last 17 months (Forbes Contributor, 2022). This will harm communities already more susceptible to food deserts due to their low income. At the same time, while the merger would lead to a decrease in price competition between local grocery stores, this leads to higher prices born of a strengthened grocery store monopoly.
In addition, politicians on both sides of the aisle stand united in their regard for this deal. In a tweet (Sanders, 2022) by Senator Bernie Sanders last week, he voiced that the agreement should not go through due to the recent increase in the prices of food that will likely happen, even though Kroger pledged the opposite would happen. Senator Mike Lee, the senior Republican member of the Senate Anti-trust committee, also raised concerns regarding the agreement, saying (Lee, 2022), “I will do everything in my power to ensure our antitrust laws are robustly enforced to protect consumers from anticompetitive mergers that could further exacerbate the financial strain we already feel in the grocery store checkout aisle.” The shared concern of what this merger could lead to on both sides of the political aisle is a sign that Americans should be wary of the plan, regardless of Kroger’s promises to lower food prices.
This merger should not go into effect. Although large profits would be made for the Kroger and Albertsons corporations, it would be at the expense of the public, harming some of the most vulnerable communities already experiencing food scarcity. Food and drink prices will continue to rise with wages not following suit, those with dietary restrictions will face hardship due to store closings, and many food deserts will be created and expanded. This deal does not consider the problems that most Americans (Shrider, Kollar, Chen, & Semega, 2021) have, such as low income and poverty. Also, six in ten (PR Newswire Contributor, 2014) Americans have at least one food restriction. This deal will cause trouble for many, and although it may be unalarming or profitable for a slice of America, many American citizens will be negatively affected.
Edited by Lola Cleaveland
Works Cited
Allyn, R. (2022, October 14). Could grocery store mega-merger create lower prices for shoppers? Retrieved December 13, 2022, from cbs8.com website: https://www.cbs8.com/article/news/local/could-grocery-store-mega-merger-mean-lower-prices/509-d99f4f4c-6140-4827-91e7-d90271093f5b
Bomey, N. (2022, October 14). Kroger is promising to lower prices after its proposed acquisition of Albertsons. Retrieved December 13, 2022, from Axios website: https://www.axios.com/2022/10/14/kroger-albertsons-deal-merger-prices
Dutko, P., Ploeg, M., & Farrigan, T. (2012). Characteristics and Influential Factors of Food Deserts. Retrieved from https://www.ers.usda.gov/webdocs/publications/45014/30940_err140.pdf
Farfan, B. (2019, August 5). The World’s Largest Grocery Store Chains. Retrieved December 13, 2022, from LiveAbout website: https://www.liveabout.com/largest-retail-grocery-stores-3862931
Forbes Contributor. (2022, October 1). U.S. Wage Growth Fails To Keep Up With Rising Prices For 17 Consecutive Months. Retrieved December 13, 2022, from Forbes website: https://www.forbes.com/sites/qai/2022/10/01/us-wage-growth-fails-to-keep-up-with-rising-prices-for-17-consecutive-months/?sh=24a59d01b007
Kang, J. (2022, October 21). Kroger-Albertsons Antitrust Review Likely to Focus on Local Store Overlap. Retrieved from WSJ website: https://www.wsj.com/articles/kroger-albertsons-antitrust-review-likely-to-focus-on-local-store-overlap-11666344601
Kroger Contributor. (2022, October 14). Kroger and Albertsons Companies Announce Definitive Merger Agreement. Retrieved from ir.kroger.com website: https://ir.kroger.com/CorporateProfile/press-releases/press-release/2022/Kroger-and-Albertsons-Companies-Announce-Definitive-Merger-Agreement/default.aspx
Lee, M. (2022, October 14). Sen. Lee Plans Oversight of Grocery Mega-Merger. Retrieved from Mike Lee US Senator for Utah website: https://www.lee.senate.gov/2022/10/sen-lee-plans-oversight-of-grocery-mega-merger
Miller, M. (2022, October 21). What Kroger-Albertsons merger could mean for CA grocery. Retrieved from The Sacramento Bee website: https://www.sacbee.com/news/equity-lab/article267514228.html
PR Newswire Contributor. (2014, June 10). Majority of US Households Have Someone With Diet Restrictions. Retrieved from Manufacturing.net website: https://www.manufacturing.net/operations/news/13176655/majority-of-us-households-have-someone-with-diet-restrictions
Sanders, B. (2022, October 13). @SenSanders. Retrieved from Twitter website: https://twitter.com/SenSanders/status/1580722266370822144?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1580722266370822144%7Ctwgr%5E264a00f74d84bfbab8f24ab759276c9a00de2e0c%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.deseret.com%2Futah%2F2022%2F10%2F17%2F23409177%2Fkroger-albertsons-merger-will-consumers-pay-more
Shrider, E. A., Kollar, M., Chen, F., & Semega, J. (2021, September 14). Income and Poverty in the United States: 2020. Retrieved from The United States Census Bureau website: https://www.census.gov/library/publications/2021/demo/p60-273.html
Sigel, J. (2022, October 21). Kroger-Albertsons Antitrust Review Likely to Focus on Local Store Overlap. Retrieved from WSJ website: https://www.wsj.com/articles/kroger-albertsons-antitrust-review-likely-to-focus-on-local-store-overlap-11666344601
SNS. (2021, July 6). Top 25 supermarket operators by sales. Retrieved December 13, 2022, from Supermarket News website: https://www.supermarketnews.com/retail-financial/top-25-supermarket-operators-sales
