Kroger Says It Will Lower Prices After Albertsons Merger
As its pending merger with Albertsons Cos. grows nearer, The Kroger Co. has shared insights into how it lowered prices in previous mergers, along with its commitment to do the same after this latest deal goes through.
“We believe the way to be America’s best grocer is to provide great value by consistently lowering prices and offering more choices,” said Kroger Chairman and CEO Rodney McMullen. “When we do this, more customers shop with us and buy more groceries, which allows us to reinvest in even lower prices, a better shopping experience and higher wages. We know this model works because we’ve been doing it successfully for many years, and this is exactly what this merger will bring customers – lower prices and more fresh, affordable choices.”
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According to Kroger, it has invested to lower prices consistently since 2003, resulting in $5 billion in customer savings and providing more affordable products to U.S. families. In support of this approach, Kroger provided an analysis that puts the investment into clearer context and includes additional details:
- Lowered prices and enhanced the customer experience during previous mergers: Kroger invested more than $125 million to lower prices at Harris Teeter after its merger in 2014 and $100 million-plus to lower prices at Roundy’s after its merger in 2016. Further, Kroger invested $2.5 million and $2.4 million in capital per Harris Teeter and Roundy’s store, respectively, to improve the customer experience in the three years following each merger.
- Reduced profits to ensure that groceries remained affordable: According to Kroger, its continuing work to lower prices in the past 20 years has reduced its gross margin by 5%, while, Amazon, Ahold Delhaize, Walmart and Dollar General have increased their gross margins by 22%, 4%, 1% and 2%, respectively, during the same time period.
- Made clear commitments to lower prices and enhanced the customer experience post-merger: Kroger will invest $500 million to reduce prices following the merger with Albertsons starting immediately after the transaction closes. The grocer will also invest $1.3 billion to improve Albertsons’ stores following the merger to better serve customers.
- Aims to become more competitive and able to invest even more to support customers and associates by combining with Albertsons. According to Kroger, the merger with Albertsons will enable it to attract and retain more customers by lowering prices, creating a more seamless and personalized experience, and growing its selection of fresh, affordable food. In this way, Kroger expects to increase revenues and drive additional investments in pricing and store improvements, in addition to wages and benefits.
Serving more than 11 million customers daily through digital shopping and retail food stores under a variety of banner names, Cincinnati-based Kroger is No. 4 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. As of Dec. 2, 2023, Boise, Idaho-based Albertsons operated 2,271 retail food and drug stores with 1,726 pharmacies, 401 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. It has stores across 34 states and the District of Columbia under 24 banners, among them Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci's Food Lovers Market. Albertsons is No. 9 on The PG 100. PG also named Kroger and Albertsons among the Retailers of the Century.
