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ICYMI, the country’s two largest supermarket chains unveiled plans to merge last year through a deal valued at a cool $24.6 billion in an effort to compete against giants like Walmart and Amazon. The deal is expected to close in 2024, if the megamerger can withstand recent vocal opposition from union groups and consumers and, of course, inquiries from the Federal Trade Commission (FTC).
This month, local unions of the United Food and Commercial Workers, representing 100,000+ Kroger and Albertsons workers, held protests across 12 states and the District of Columbia in opposition to the merger. The protests were part of the Stop the Merger coalition, consisting of 100+ organizations, formed last month. The coalition has called on the FTC to block the merger, which it believes would lead to higher prices, lost jobs, and farmers and suppliers being “unable to sell their products,” according to its website.
The deal is also facing consumer pushback: A group of 25 consumers across 11 states filed a lawsuit in February, saying the merger violates antitrust law. Kroger last week filed a motion for dismissal, saying the suit was void of “real-world facts.” A hearing is scheduled for May 18.
Though Albertsons and Kroger have said they may have to divest some stores as part of the deal, Kroger CEO Rodney McMullen said in a Senate subcommittee hearing last year that Kroger and Albertsons have no plans to close any stores or lay off frontline workers and aim to invest in lower grocery prices.
- Sources told the Wall Street Journal that the FTC has been reaching out to grocery stores and wholesalers in recent months to get their thoughts on the deal.
Weathering the store: Albertsons still sees a few challenges for the coming year. In its fiscal Q4 2022 earnings released last week, Albertsons reported that its sales increased 5% to $18.3 billion. However, its gross margins decreased 27.8%, which it attributed to cost of product, supply chain and advertising costs, and operations relating to its digital sales were contributors to this.
- Albertsons also lost its top lawyer, Juliette Pryor, this month, leaving after three years with the chain to join Lowe’s.
“We have prepared our business for a more difficult consumer environment, and are expecting significant labor investments and inflationary cost increases,” CEO Vivek Sankaran said in a statement.
+1: Not everyone seems concerned about the deal: Sprouts Farmers Market CEO Jack Sinclair, a former Walmart exec, recently said the merger wouldn't “bother” the grocer very much, but wasn’t sold on the effectiveness of the deal. “I’m not sure putting two big things together to make a bigger thing, but still smaller than Walmart, is going to do anything,” he said.