Study: Planned Kroger-Albertsons merger will equal lots more Kroger customers

The Kroger-Albertsons merger is expected to bring in a lot more customers for Kroger, according to a new report from Numerator. The acquisition will give Kroger more of a national presence, as Albertsons operates heavily in the West and New England regions, said the data and technology company.

By the end of 2019, the retailers maintained a CPG market share of 7.6% for Kroger, and 3.9% for Albertsons. Market share reached highs of 7.8% for Kroger and 4.0% for Albertsons during the onset of COVID-19. More recently, Kroger’s share has dropped to a three-year low of 6.7%, but Albertsons is at a three-year high of 4.1%.

With that said, what would the merger mean for the new Kroger customers? Well, to start, with the acquisition, Kroger will reach two out of three shoppers in the U.S. As of now, Kroger has about 65 million shoppers. But if the merger goes through, the retailer's customer base could swell to more than 21 million more.

According to Numerator data, Kroger could stand to gain 14% Hispanic consumers (representing 3 million new shoppers) and 13% Asian consumers (representing 2.6 million new shoppers). Currently, Kroger shoppers are 12% Hispanic and 7% Asian. Additionally, Kroger’s new shoppers may be 25% more likely to live in an urban location, and 55% more likely to rely on trains or subways to commute to and from home than the average shopper, said the report, meaning “brands will need to offer a more diverse range of product sizes to better suit Kroger’s diversified shopper base.” 

Regarding private brands, Albertsons’ private label “is one of the top three private-label brands that Kroger shoppers are switching to, along with Walmart and Sam’s Club.” Kroger’s brands have seen consistent share losses, but Albertsons’ brands—which includes Signature, Open Nature and Value Corner lines—have experienced share growth, outperforming in the last year with sales growth seven times greater than Kroger, said the report.

Albertsons’ e-commerce strategy has also seen successful growth in share, nearly tripling year over year for the latest 12 months. The company has been able to attract new customers to its digital platform and retain them. Kroger’s eCommerce development has stayed flat, with negligible share changes year over year, according to the report. Growth in this area for Albertsons is being attributed to the store’s shoppers buying online and picking-up in-store through their DriveUp & Go service. Albertsons’ digital sales grew by 36% in the second quarter of fiscal 2022.

Kroger announced a $24.6 billion deal to purchase Albertsons on Oct. 14. The deal would give Kroger ownership of all Albertsons stores, and will make Kroger the second grocery retailer to own double-digits of market share—following Walmart. The Kroger-Albertsons merger has been approved by the boards of both retailers but is still subject to federal antitrust review.