Proposed merger between Kroger Grocery (K) – Get a free reportAnd Albertson (ACI) – Get a free reportIt is challenged. After the merger was first exposed, it became clear that some people did not understand the purpose of the merger. The merger will result in the company owning a total of 5,000 grocery stores in 48 states.
The merger will also create 52 industrial plants, about 4,000 pharmacies and more than 2,000 fuel stations. The merger will create a market share of about 18 percent for the new Kroger & Albertson entity.
In an effort to quash concerns surrounding the merger, Kroger CEO Rodney McMullen and Albertson CEO Vivek Sankaran issued a joint statement to Cincinnati Enquirer. They addressed the effects on consumers and employees, such as Kroger’s pledge to close zero of its stores, employees losing their jobs, and groceries becoming more expensive. The statement that no front-line workers will be laid off does not include all employees. The pair of CEOs stated that the company will offer lower prices and more options that customers need and want after the merger.
Merger concerns would have to come from other, larger companies, because this merger would put the grocer on a more level playing field with Walmart. (wmt) – Get a free reportAmazon (AMZN) – Get a free reportCostco (it costs) – Get a free reportand the goal (TGT) – Get a free report.
Clash
Kruger and Albertson commit to fighting
The obligation to make the merger is either a promise or a threat, depending on who you are. Both CEOs have committed to working towards achieving the merger, despite facing lawsuits from American Antitrust Institute. The merger has raised many questions about how it will affect companies and their employees. The combination of the two chains would create another competitor the same size as Walmart, which also has nearly 5,000 stores.
Wal-Mart may see the biggest challenge, since the merger will help grocery chains reach a similar consumer in the same way as brick-and-mortar locations. While Amazon can reach much of the same market, it doesn’t have the same target audience as a local grocer.
The International Federation of United Food and Commercial Workers issued a statement.
“At our ninth regular conference, hundreds of CTU delegates representing our entire union from across the country gathered to declare unanimously that mergers pose a serious threat to our members’ livelihoods, and we must act to confront them,” the statement said.
“Given the lack of transparency, and the impact a merger between two of the largest supermarket companies could have on essential workers — and the communities and customers they serve — the NFL stands united in its opposition to the proposed Kroger and Albertsons merger, according to the supermarket news.
“The only parties that stand to benefit if this merger is not completed are large non-union competitors like Wal-Mart and Amazon,” Krueger said in an email to Supermarket News.
What is Kruger not talking about
Kroger & Albertson is ready to pursue the legal process for the merger. Which could mean a protracted battle. All the “promises” that are made in connection with the so-called merger myths, are not legally binding. The statements made by the CEOs give hope that the merger will benefit its consumers and there will be another retail giant in the grocery market alongside Wal-Mart and other competitors.
The idea that the consumer will benefit from lower costs when they check out their groceries is not something a grocery chain can promise and deliver. These are really hopes, not promises.
Promises that shops won’t close, that frontline workers won’t lose their jobs, again is not a promise that can be kept. The idea that frontline workers will not be affected may be in line with the current job crisis, but it cannot be guaranteed over a long period of time.
Other convenience stores feel the threat that they will not be able to compete with the presence of another large retail giant in the grocery market. Increasing the level of competitiveness in the large retail grocery market, however, can lower prices among these giants to benefit the consumer, but not the smaller grocery stores.