Kroger Promises To Lower Prices, Under One Condition

The grocery giant is trying to secure its massive merger with Albertsons.

For nearly 18 months, the potential merger of Kroger and Albertsons, two supermarket giants, has faced backlash from many groups and scrutiny from the federal government, causing endless delays to the process. Both companies have done what they can to close the deal, and that involves easing any concerns shoppers have about the pending merger. Kroger is now appealing to the public in the most direct way yet: The grocery chain promises that upon completion of the merger, it will lower its prices.

If it feels like the Kroger/Albertsons merger has been in the works for years, that's because it has. The two grocery giants announced their plans back in 2022 when Kroger made a deal to purchase Albertsons for $24.6 billion. The pending merger would affect not just those grocery chains, but a laundry list of regional stores they each own nationwide, such as City Market, Fred Meyer, Jewel-Osco, Mariano's, Ralphs, Safeway, and more. Between the two companies and their affiliates, there are more than 6,000 stores across the country involved in this deal.

The Federal Trade Commission has been closely evaluating the merger to ensure it doesn't create unfair pricing for shoppers or a monopoly in the grocery industry. To ease those concerns and others, Kroger stated in October 2022 it would use $1 billion from the merger deal to raise employee wages and benefits, and it would reinvest $500 million into cost-saving measures for customers.

Albertsons and Kroger also committed in 2023 to sell a collective 413 stores, including the entirety of the Mariano's and Carrs brands, as well as a number of private brands, including Open Nature, Waterfront Bistro, Debi Lilly Design, Primo Taglio, and ReadyMeals, a potential sale amounting to $1.9 billion, should the FTC grant its approval.

In Kroger's latest statement, it again referenced the aforementioned $500 million in cost-saving for customers. The company calls out past instances in which it lowered prices after a merger, noting that it invested more than $125 million to lower prices at Harris Teeter in 2014 and $100 million to lower prices at Roundy's following a 2016 merger.

"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," Rodney McMullen, chairman and CEO of Kroger, said in the statement.

The company emphasized its plans for lowering prices by noting that the $500 million will be invested "starting day one following the transaction close."

Beyond cost savings, Kroger also announced it will invest $1.3 billion to improve Albertsons stores following the merger. After years of delays and moves to quell concerns, Kroger might be running out of cards to play to make this merger happen.