It happens every day. In fact, it’s probably happening right now, all over the world. And, no, I’m not talking about people pooping, babies being born, or dude-bros debating whether Taylor Swift is the voice of a generation. No, I’m talking about big companies merging. In October, two of the biggest companies in the grocery space announced the business deal heard ’round the world: Kroger is set to merge with Albertsons.
WHAAAAT?!?
Kroger is merging with Albertsons? What’s that gonna look like?
Let’s take a step back and look at what’s happening here. Kroger is a supermarket group headquartered in Cincinnati, Ohio. Before this merger, they owned stores including but not limited to, Kroger, Ralphs, Dillons, Smith’s, King Soopers, Fry’s, QFC, City Market, Owen’s, Jay C, Pay Less, Baker’s, Gerbes, Harris Teeter, Pick ‘n Save, Metro Market, and Mariano’s. Albertson’s is a supermarket group headquartered in Boise, Idaho, and pre-merger their portfolio included Albertsons, Safeway (Safeway merged with Albertson’s back in 2015, fun fact), Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets, Balducci’s Food Lovers Market, and more under their larger umbrella corporation. And those two giants are about to fuse into an even gianter giant (which, ironically, is one of the few grocery store chains they will not own).
Now you might be thinking, “Hold up, if Kroger merges with Albertsons, won’t they own like half of all grocery stores in the U.S.? Is that even allowed?” And that’s just the thing. They won’t own anywhere close to 50%; they’ll own 19%, with Walmart, Costco, Amazon, and others making up the other 81%. But that still seems like a lot, right? According to the FTC, “Courts look at the firm’s market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50% of the sales of a particular product or service within a certain geographic area.” So these guys may be getting “gianter,” but not so giant that the government is worried all that much. In fact, Walmart alone already has 27% of the grocery store business in the U.S., which is almost a third more than Albertson’s and Kroger’s combined 19%, but when you think about the fact that 19% of the grocery store business is still worth $200 billion per year, it seems pretty darn significant. That is literally SO much money that my little monkey brain can’t really even begin to fully understand its magnitude. Anyhoo, this all leaves one big question:
What will the Kroger-Albertson’s merger mean for us: ~the consumers~?
Will any store layouts change? Will we be able to get in-house generic Kroger brand things at Safeway now? Will Ralphs have Signature Select? Will capitalism as we know it implode and then, in the Wild Wild West era of grocery stores, Trader Joe’s, the unlikely underdog, will rise up as the new grocery store sheriff in town and one day reign supreme?
The truth is, no one is entirely sure how this will play out. People have speculated that this could cause some combination and/or elimination of stores in areas where there are multiple stores next to each other. It could be that the government will require them to give up some store locations (up to 375) in parts of the country where there’s “overlap” in order to keep the grocery store playing field a little more level. But we don’t know anything for sure. What we do know is that the goal of this is to maybe, just maybe allow both store families to reduce their prices just a little (since they’ll presumably be better able to bargain with suppliers) and help us out in this time of ridonkulous inflation, to raise employee wages and benefits (yay!), and, obviously, to better compete with behemoths like Walmart.
Beyond that, we’ll just have to see what happens on the ground in our local grocery stores over the next year or so!
Thoughts? Questions? Complete disagreement? Leave a comment!