Kroger continued efforts to advance its proposed $24.6 billion merger with Albertsons Cos. this week by promoting its track record for lowering prices following past mergers with other grocers.
The grocer has argued since 2022 that the megamerger would enable the combined companies to cut prices and better compete with rivals like Amazon and Walmart.
Kroger said on Tuesday that its previous acquisitions of smaller grocers have resulted in lower prices and helped consumers.
“We believe the way to be America’s best grocer is to provide great value by consistently lowering prices and offering more choices. 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,” said Rodney McMullen, chairman and CEO of Kroger, in a statement. “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.”
The company noted that it has invested in lowering prices since 2003 and saved consumers $5 billion in the process.
Kroger invested $125 million and $100 million to lower prices during its 2014 merger with Harris Teeter and 2016 merger with Roundy’s, respectively. “Additionally, Kroger invested $2.5 million and $2.4 million in capital per Harris Teeter and Roundy's store, respectively, to enhance the customer experience in the three years following each merger,” the company said in a press release.
The investments in lowering costs for shoppers has reduced Kroger’s gross margin by 5% over the last 20 years. Over that same time period, Amazon increased its gross margin by 22%, Ahold Delhaize by 4%, Dollar General by 2%, and Walmart by 1%, according to Kroger.
The grocer went on to say that it plans to invest $500 million to lower prices, once the transaction is complete, and it will invest $1.3 million to improve Albertsons’ stores.
“Kroger’s merger with Albertsons will allow it to attract and retain more customers by lowering prices, creating a more seamless and personalized experience and expanding its selection of fresh, affordable food. By doing so, Kroger expects to grow revenues and drive additional investments in pricing and store improvements as well as wages and benefits,” the company said.
Economists and industry experts anticipated the merger would be approved in January of this year, but the deal still awaits approval by the Federal Trade Commission. A report by Axios speculated that the FTC would not be ready with a decision until February, but now analysts predict the deal will be approved sometime in the first half of the year.
“In light of our continuing dialogue with the regulators, we are updating our anticipated closure timeline,” the grocers said in a statement in January.
