Kroger is currently the largest standalone grocery store chain in the United States, and Albertsons is the second largest. By merging, the two companies would become even more powerful, giving them more control over supplier pricing and labor relations. Their combined operations would also make countless jobs, from warehouse workers to analysts, obsolete.
Already, grocery stores have been experiencing record-high turnover, with three in four grocery workers reporting having faced food insecurity. With the combined power of the two chains, the company would be able to steamroll the unions that have been working to improve pay. In addition to a weakened negotiating position, workers would also inevitably face layoffs as redundant jobs are cut.
With more shelf space and purchasing power, the chain would also be able to negotiate better rates and terms from suppliers. Smaller suppliers may be squeezed out of the market entirely, further narrowing the number of companies providing products for Americans to choose from.
If completed, the merger is also expected to further reduce the number of grocery stores currently open in the country. According to Forbes, there are already 30% fewer grocery stores now than there were a few decades ago, and most stores are owned by a few major brands.
There is also considerable concern that a merger between these two giants could lead to higher prices on common products across the board thanks to the consolidation of competition.
"This merger is a cut and dried case of monopoly power, and enforcers should block it," said Sarah Miller, executive director of the anti-monopoly nonprofit American Economic Liberties Project.
Beyond regular grocery shopping, the merger could also have a negative impact on the wholesale market. Both chains currently operate a wholesale division distributing to third-party retailers, and a merger would most likely lead to a consolidation of things like warehouses and further layoffs.
Analysts also say that any savings the grocer lands as a result of the merger are unlikely to be passed on to consumers.
"Regulators and policy makers should do more than just block the Kroger and Albertsons merger," Forbes' Errol Schweizer writes. "Nor should the grocery industry be a quarterly ATM for investors. The grocery industry is far too concentrated and suppliers, employees and consumers would all benefit from disaggregating the grocery giants."
Kroger is the parent company for a number of other major grocery chains, including Fred Meyer, Ralphs, King Soopers, and Harris Teeter. Operating in 35 states, the company has roughly 2,800 stores and 420,000 employees. Albertson, with its 2,200 stores and 290,000 employees, operates in 33 states and also owns Safeway, Acme, and Tom Thumb.
Investment in the grocery market has boomed in recent years, especially during the COVID-19 pandemic. Amazon's
"Customers continue to adjust their shopping habits in response to ongoing inflation," Kroger's chief executive William Rodney McMullen said last month. "Our customers are looking for ways to save and we are there for them."