Kroger’s plan to acquires supermarket rival Albertsons in a nearly $25 billion deal that would create a grocery company with more than 4,500 stores in 48 states.
On Friday, Kroger CEO Rodney McMullen told The Cincinnati Enquirer, part of the USA TODAY Network, what he thinks the deal will work for for shoppers, workers, and Cincinnati. Here are the highlights:
How will the Kroger-Albertsons deal affect shoppers and products on store shelves?
McMullen: “Saving a lot of the supply chain will really help improve product freshness because we’ll have a warehouse closer to the store and you’ll likely lose a day or two in your purchase cycle.” That’s fresh. … When I look at the brands (Albertsons private label), they’ve done a great job. … Between the two companies, we have an incredible portfolio.”
He said Kroger researched the Albertsons home brand O Organics when it created its own SimpleTruth label, which is now a $3 billion brand. Private labels or local brands are expected to be important tools in attracting and retaining customers as more and more shoppers turn to generic store brands to offset costs. inflationary. Combined, Kroger and Albertsons sell $43 billion in private label products each year.
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How will this deal affect consumers?
McMullen: “I expect (the impact) to be very limited. What it will allow us to do is obviously at a larger scale. We’ll be able to continue to invest in our associates in shape. method of paying and investing in customer pricing. … I’m sure we’ll learn from each other. We’ll get the benefit of that.”
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What did Kroger get when he took over the Albertsons?
McMullen: “It gives us a national scale, and we’ll be able to leverage technology and other things (using that) on a larger scale. … (Although) they run it. smaller stores are better than what Kroger does.”
A major part of the deal’s appeal is that it’s an “additional” or “rapid” acquisition. It mainly expanded Kroger into territories where it had a thin presence or where there was no Kroger.
In addition to Kroger stores, the Cincinnati-based grocer operates several regional supermarket chains in 35 states, including Fred Meyer, Harris Teeter, Ralphs, Mariano’s, Fry’s, Smith’s, King Soopers, QFC and the others. The company has nearly 2,800 stores and employs 420,000 workers. The deal will add Albertsons, Acme, Safeway, Vons, Jewel-Osco, Shaws and other regional names. It will supply Kroger stores in five states of New England, New York and Pennsylvania, among others.
Are job cuts part of the $1 billion cost savings that combined companies are looking for?
McMullen: “We really wouldn’t expect that to happen…we don’t think the savings are there. …Over time, we’ve been able to grow, it’s really moved in the right direction. different when we need more people.”
While Kroger is expected to cut combined operating costs by $1 billion, much of that is expected from improved sourcing (purchasing power) and more efficient production and distribution. During additional acquisitions, there tends to be less overlap of functions and less work cuts. However, thousands of associates will not join Kroger because it is likely that hundreds of stores will be split up to assuage regulators’ antitrust concerns.
Where will you divest stores – Los Angeles, Denver, Seattle?
McMullen: “Both companies have professional advisors that help us understand the FTC (the Federal Trade Commission’s antitrust regulator). … They really look at it (market share) circle. 3 miles x 3 miles circle. … So we’re going to sit down with the FTC and look at it on a market-by-market basis.”
The deal is expected to close through early 2024 following regulatory and antitrust review. To appease regulators, 100 to 375 Albertsons stores are expected to be spun off as a separate company owned by Albertsons shareholders.
For the latest information on the business of Kroger, P&G, Third Bank and Cincinnati, follow @alexcoolidge on Twitter.
This article originally appeared on the Cincinnati Enquirer: How will the Albertsons deal affect shoppers? What does Kroger’s CEO say?
