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The rumors were true; Kroger bought Albertsons in a $25 million deal. Now, the merged grocery chains have a chance of being the biggest grocery giant out there.
So … what does Kroger buying Albertsons mean to shoppers? Will we see more Kroger deals? Will prices go down or up? We’ll try to answer what we can.
Kroger announced they bought Albertsons for nearly $25 billion.
It’s official; Kroger announced their $25 billion all-cash purchase of Albertsons — on Oct. 14, 2022.
Now, that the merger is official, it means the combined power of Kroger and Albertsons is good enough to be the largest grocery store in the U.S., with a market share that would challenge industry leader Walmart.
The merger could mean cheaper prices, but fewer promotions and sales.
Why does Walmart have lower prices than their competitors? They have the biggest market share and, therefore, negotiating power. And a bigger Kroger empire would have more clout to negotiate with manufacturers for lower prices and product coupons/promotions.
We could also see Albertsons/Kroger store brands drop in price, as the mega-grocer would have a greater ability to compete with brand names’ prices.
As far as in-store promotions go, expect to see fewer of those, since the new Kroger would have a stronger market share and less of a need to stand out from other grocers. (How many storewide promotions/sales do you see on groceries at Walmart? Pretty much none.)
TIP: If you’re an Albertsons shopper, it’s almost guaranteed that your grocery bill will drop; Kroger is consistently cheaper than Albertsons on most grocery categories … and they have one of the best couponing policies.
It’s not a done deal; the U.S. government would have to approve of the merger.
Kroger has about 10% of the grocery market share in the U.S., and merging with Albertsons would take them up to 15.7%. That would put them within striking distance of Walmart, which has 20.9% of the U.S. grocery market share.
The whole deal will likely face government scrutiny, since the mega-grocer would have purchasing power and resources that could put competitors out of business. And since shoppers are feeling inflation the most with food prices, the government is going to want to watch how the merger would affect shoppers’ budgets.
The companies are looking at selling hundreds of stores to satisfy government requirements.
Kroger and Albertsons have a lot of store overlap in competitive areas, particularly on the West Coast. As part of the merger, the government would likely require “asset sales” — which means the mega-grocer would need to sell some locations.
As of 2022, Kroger has 2,800 stores in 35 states, while Albertsons has 2,200 stores in 34 states and Washington, D.C.
A recent report in Reuters suggests that the companies are looking at selling 250-300 stores in the areas where Kroger and Albertsons overlap, such as the Pacific Northwest, Southern California, Phoenix, and Chicago. And if they can’t find a buyer, they’d “spin off” the stores into a separate company that would be owned by shareholders.
But the government doesn’t want the supermarkets’ offloaded stores to be set up to fail. They’ll be looking to make sure that the sold stores will be able to make it on their own.
Kroger would double in size by purchasing Albertsons.
In addition from increasing their U.S. grocery market share from 9.9% to 15.7%, the new-look Kroger would have about 5,000 total stores (and 710,000 employees), encompassing the following subsidiary grocery store chains:
- Balducci’s Food Lovers Market
- City Market
- Food 4 Less
- Foods Co
- Fred Meyer
- Harris Teeter
- Jay C
- King Soopers
- Kings Food Markets
- Metro Market
- Pay Less
- Pick ‘n Save
- Star Market
- Tom Thumb
- United Supermarkets
The stores are located in 36 states (plus Washington, D.C.): Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
Brush up on your money-saving tips at both stores.
While there are still a lot of unknowns, it’s clear that you won’t see major changes to your go-to grocery store in the near future. But just in case you’ve never shopped at Albertsons (or Kroger), we can teach you how to coupon at Kroger and how to coupon at Albertsons — so when the time comes, you’ll know exactly how to save money on your grocery bill.