A possible $24.6 billion deal between supermarket rivals, Kroger and Albertsons, has hit another roadblock with the U.S. government, but the CEO has pledged to cut prices by $1 billion on day one to try and save the proposed deal.
After the U.S. government’s request for a preliminary injunction that would block the deal, chief executive of the nation’s third-largest general retailer Rodney McMullen took the stand in a federal courtroom in Oregon on Wednesday as part of a three week hearing to defend the merger with Albertsons.
Kroger CEO Rodney McMullen leaves federal court after testifying during a federal court hearing, Sept. 4, 2024, in Portland, Ore.
Jenny Kane/AP
McMullen argued that the move would allow the company to drop prices and compete with bigger retail companies like Walmart, Amazon, and Costco.
The definitive merger agreement was first announced in October 2022 and last month the Federal Trade Commission, and states of Colorado and Washington, filed a lawsuit to stop the merger, arguing it would “eliminate competition” in the 22 states where the companies currently compete and raise grocery prices for millions during a time when Americans are already paying more due to high inflation on food.
A Kroger grocery store.
Jonathan Weiss/Adobe Stock
On Wednesday, McMullen said Albertsons prices are 10 to 12% higher than that of Kroger’s and argued that the merged company could aim to shrink that gap in its new strategy to retain customers.
If combined, Albertsons and Kroger would control around 13% of U.S. grocery sales, which is still short of Walmart that currently controls nearly 22%.
Cincinnati-based Kroger operates 2,800 stores across 35 states, with brands including Ralphs, Smith’s and Harris Teeter.
Boise-based Albertsons operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw’s.
An Albertsons grocery store in Lafayette, La.
Adobe Stock
If the deal does go through, it would be the largest grocery chain merger in U.S. history.
Food prices continues to come up as a recurring topic for politicians, with Vice President Kamala Harris saying on the campaign trail that if elected President, she would crack down on prices.
Former President Donald Trump has campaigned on inflation and recently reminded the public that grocery prices increased by more than 20% under President Joe Biden.
More details will emerge from the multi-court hearing on the proposed grocery chain merger, which will include upcoming testimony from Albertsons CEO Vivek Sankaran.
Kroger CEO, Rodney McMullen, has announced a bold move to reduce prices on groceries by $1 billion following the potential merger with Albertsons. This decision comes as a strategic move to stay competitive in the ever-evolving grocery industry.
The potential merger between Kroger and Albertsons has been a hot topic in the industry, with many speculating on the impact it will have on consumers. With this announcement, Kroger is showing its commitment to providing affordable and high-quality groceries to its customers.
McMullen stated, “We understand the importance of offering competitive prices to our customers, and we are committed to delivering on that promise. By reducing prices by $1 billion, we are ensuring that our customers can continue to enjoy the products they love at prices they can afford.”
This price reduction is expected to benefit customers across all Kroger stores, including Kroger, Ralphs, Fred Meyer, and more. The company is also planning to invest in technology and infrastructure to further enhance the shopping experience for its customers.
In addition to the price reduction, Kroger is also focusing on expanding its online presence and delivery services to meet the growing demand for convenient shopping options. The company recently launched Kroger Delivery, a service that allows customers to order groceries online and have them delivered straight to their door.
Overall, this announcement from Kroger highlights the company’s dedication to providing value to its customers while staying ahead of the competition. With the potential merger with Albertsons on the horizon, Kroger is taking proactive steps to ensure that it remains a top choice for grocery shoppers nationwide.
