![]() Kroger’s partnership with the Ocado Group has already led to about 20 automated customer fulfillment centers and other facilities, while Albertsons has focused on Instacart, DoorDash, and Uber Eats, according to Supermarket News. “Kroger could leverage Albertsons’ successful digital strategy investments to help implement similar initiatives for their own online services,” according to Īdding or increasing robotics like Ocado customer fulfillment centers could help grow margins, not just critical mass, according to Fenyo. Albertsons’ digital sales grew 36 percent in the second quarter of 2022, according to. said Albertsons has been able to “retain and develop habitual shopping” online, with shoppers picking-up in-store through the company’s Drive-Up & Go offering. According to, Albertsons has been growing e-commerce sales rapidly with more households shopping online and using its “successful click & collect strategy.” Mergers like this could accelerate the use of technology such as big data and e-commerce in the F&B industry, feeding into an online sales boom. The new entity reportedly would be the fifth-largest retail pharmacy chain in the nation, with nearly 4,000 pharmacies. The deal would go beyond food to include healthcare. The “S” in “superstore” could stand for “synergy” as well as “savings” for the new company. The Kroger-Albertsons mega-merger could redraw the national map in terms of market share and other ways as consolidation continues. Publix is a huge player in the South, and Grocery Outlet is big in the West. Hy-Vee is a dominant player in the Midwest, while Wakefern is a major player in the Northeast through ShopRite, Price Rite, Fairway, and many others. Coresight’s report on regional consolidation of grocery chains showed that from 2015 to 2020 M&A grew national giants’ market share as they gobbled up midsize regional competitors and otherwise expanded. “I believe this merger is the beginning of a trend and that we could see more consolidation,” according to Ken Fenyo, of Coresight Research. Kroger Chairman and CEO Rodney McMullen says the deal “brings together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders.” It could be part of a consolidation wave as companies continue to grow by merger. Mitchell said the new entity would have more clout in dealing with farmers, food workers and local grocers. “A merger would not only put smaller competitors at an unfair disadvantage, but also increase anticompetitive buyer power over grocery suppliers, which ultimately would harm consumers,” Ferrara said. ![]() The new entity would mean some competitors’ stores might close, “as more local grocers are driven out of business,” Mitchell said.Īccording to Greg Ferrara of the National Grocers Association, the merger could give “a single supermarket giant” additional control over “the nation’s food supply chain.” This could lead to even tougher competition for smaller stores, although Kroger and Albertsons argue it could lead to better prices for consumers. The nation’s top two retailers would control more than 70% of the grocery market in over 160 cities, according to Stacy Mitchell, of the Institute for Local Self-Reliance. In addition to company stores, Albertsons operates Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci’s Food Lovers Market.Īnother huge grocery retailer could put more pressure on smaller players and change the balance of power in working with suppliers. This deal would put all these brands in one basket. Kroger and Albertsons each already control multiple retail brands, creating the illusion of a large number of independent players. While Kroger-Albertsons would be a big deal, it would be very different from either Amazon AMZN or Walmart, which control only a few brands. It also could mean a stronger second nipping at the heels of Walmart. That’s a lot of people relying on just a handful of companies, and it would mean a few players as huge forces. That means the top three grocers would control more than half of the sector. Walmart already controls 25 percent, or 30 percent including Sam’s Club. Robert Ohmes of Bank of America BAC Securities said that Kroger and Albertsons combined, before any store closings, would control about 19 percent of U.S. Kroger and Albertsons together in fiscal ‘21 racked up $210 billion in revenue and $3.3 billion in net earnings, according to Supermarket News.
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