The Kroger-Albertsons Merger: Implications for the Grocery Industry

albertsons kroger merger


The potential merger of Kroger and Albertsons is sending ripples through the grocery industry, promising a superstore that could rival even the retail giant, Walmart. This proposed combination raises questions about its impact on various stakeholders – from small independent stores and suppliers to competitors, consumers, and the overall food and beverage industry. The potential outcomes appear to fall into three categories – doom for some, gloom for others, and a boom for consolidation in the future.

The Gloom: A Formidable Competitor to Walmart

The merged entity would boast around 5,000 stores across the United States, positioning itself as a close runner-up to Walmart’s impressive 5,335 stores. Analysts believe that this massive combination could create a more potent competitor for Walmart, putting pressure on the world’s largest retailer. With a revenue of $210 billion and $3.3 billion in net earnings in fiscal year ’21, Kroger and Albertsons together would command nearly 19 percent of the U.S. grocery market share. While Walmart currently controls 25 percent (or 30 percent including Sam’s Club), and Costco holds another 9 percent, the top three grocers would dominate over half of the market. This consolidation could lead to a robust second player nipping at the heels of Walmart, ushering in a new era of intense competition.

It’s important to note that the Kroger-Albertsons merger differs significantly from the market strategy of Amazon and Walmart, which control only a few brands each. In contrast, Kroger and Albertsons already preside over multiple retail brands, creating the illusion of numerous independent players. However, if the merger were to go through, all these brands would be united under one corporate umbrella.

The Doom: Impact on Smaller Players and Suppliers

The merger of these two grocery retail giants could have dire consequences for smaller competitors and suppliers. In over 160 cities, Kroger and Albertsons would command more than 70 percent of the grocery market, leaving smaller players struggling to survive. Consequently, many local grocers may be forced to shut their doors, driven out of business by the overwhelming presence of the merged entity.

Moreover, this consolidation might grant the “single supermarket giant” unprecedented control over the nation’s food supply chain, as expressed by Greg Ferrara of the National Grocers Association. While Kroger and Albertsons argue that this could lead to better prices for consumers, others fear that it may create an unfair disadvantage for smaller competitors and increase anticompetitive buyer power over grocery suppliers. This, in turn, could adversely impact consumers, as the new entity wields greater clout in dealing with farmers, food workers, and local grocers.

The Boom: A Wave of Consolidation

On the other hand, Kroger Chairman and CEO Rodney McMullen envisions this merger as a means of delivering superior value to customers, associates, communities, and shareholders. This strategic move could potentially spark a broader consolidation wave, as companies seek growth opportunities through mergers.

Ken Fenyo of Coresight Research believes that this merger might just be the beginning of a trend, possibly leading to further consolidation in the grocery industry. Coresight’s report on regional consolidation of grocery chains from 2015 to 2020 indicated a significant market share increase for national giants through mergers, as they acquired midsize regional competitors and expanded their presence.


The proposed Kroger-Albertsons merger brings both excitement and apprehension to the grocery industry. While it could give rise to a formidable competitor for Walmart, it may also exert significant pressure on smaller players and alter the dynamics of working with suppliers. Regardless of the outcome, the potential consolidation trend signifies an evolving landscape for grocery retailers. As this high-stakes saga unfolds, all stakeholders in the food and beverage industry must brace themselves for the potential doom, gloom, and boom that lie ahead.

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