Kroger’s Merger with Albertsons Promises Lower Prices

The supermarket giant Kroger has shared additional insights about how the company had lowered prices in previous mergers. This bolstered its commitment to bringing more consumers across America, lower prices, and more choices following its proposed merger with Albertsons Cos.

“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. “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.”

This strategy is familiar to Kroger. The retailer has invested in lowering prices consistently since 2003. The results are $5 billion in customer savings and providing more affordable products to families across America. Kroger offered an analysis that puts this significant investment into a clearer context and includes additional details.

Kroger’s strategies:

  • Consistently lowered prices and improved the customer experience during previous mergers. Kroger invested more than $125 million to lower prices at Harris Teeter after its merger in 2014 and more than $100 million to lower prices at Roundy’s after its merger in 2016. 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.
  • Reduced profits to ensure groceries remained affordable for families across America. Kroger’s ongoing work to lower prices in the last 20 years reduced its gross margin by 5%. Meanwhile, Amazon, Ahold Delhaize, Walmart, and Dollar General have increased gross margins by 22%, 4%, 1%, and 2%, respectively, during the same period.
  • Made clear, consistent commitments to lower prices and improve the customer experience post-merger. Kroger will invest $500 million to lower prices following the merger with Albertsons starting day one following the transaction close. Kroger will also invest $1.3 billion to improve Albertsons’ stores following the merger, all to serve customers better.
  • Will become more competitive and able to invest even more to support customers and over 700,000 associates by combining with Albertsons. 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 fresh, affordable food selection. By doing so, Kroger expects to grow revenues and drive additional investments in pricing, store improvements, wages, and benefits.

Related Article: Kroger Postpones Merger Deal with Albertsons

The Kroger Co. is a family of companies with over 500,000 associates serving 11 million customers daily through digital and retail stores.