Kroger Acquires Albertsons for $25 Billion: How Will It Affect the Consumers?
Kroger Co. acquired Albertsons Cos. Inc. in a $25 billion deal on Friday. According to St. Louis Post-Dispatch, the mega merger will create a bigger grocery to better compete with the industry's leader, Walmart Inc., while preparing for antitrust scrutiny.
Nearly 5,000 shops, including chains like Albertsons' Safeway and Kroger-owned Ralphs and Fred Meyer, will be grouped under one roof because of the merger of the No. 1 and No. 2 standalone grocers in the United States.
How Will the Kroger-Albertsons Supermarket Merger Affect the Consumers?
"This combination will expand customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households with a premier omnichannel experience," Kroger noted.
Together, Kroger and Albertson employ over 700,000 people across 5,000 stores. The companies said they plan to keep doing what they have always done: lower prices, improve customer service and raise employees' wages and benefits.
According to Kroger Chairman and CEO Rodney McMullen, Albertsons Cos. has a footprint that fits well with Kroger's and works in parts of the country where there are few or no Kroger stores.
He also said that the merger would move them closer to their goal of building a fairer and more sustainable food system by letting them serve more of the U.S. with fresh, affordable food in new places.
ABC News reported that the merger of the two companies would help them become a stronger alternative to larger, non-union competitors.
The newly merged firm noted that it expects to invest $1 billion to continue raising associate wages and providing full benefits to employees after close.
One of the most important parts of Kroger's go-to-market strategy is to increase the number of high-quality products and sell them cheaper.
What Makes the Kroger-Albertson Supermarket Merger a Bad Idea?
Since the outbreak began, investors and top executives have made billions in dividends and buybacks from both chains.
Price inflation above cost increases and record sales of stay-at-home cooking, store brands, and comfort foods have boosted profit margins.
Still, since 2020, all supermarket chains have had to deal with unstable supply chains, such as problems with running out of stock and higher costs for shipping and transportation.
The COVID-19 illness and death at work scarred a restless workforce, which has been rethinking poor pay, erratic scheduling, and excessive working hours.
As a result, many workers have quit their positions and slightly increased starting pay rates.
According to Forbes, up to 75% of grocery store workers have experienced food insecurity based on a recent report because their wages cannot keep up with the rising prices of necessities like childcare, housing, and transportation.
Several unions have negotiated with the chains to make new contracts with higher wages and better benefits. But a merger could make it harder for unions.
In 2004, grocery workers in California went on strike for higher wages, but the strike ended when Kroger and Albertsons worked together against their workers.
A merger could also result in many individuals losing their jobs in redundant white-collar occupations like office-based marketing, purchasing, digital sales, analytics, and category management.
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This article is owned by Latin Post.
Written by: Bert Hoover
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