Kroger promises to lower prices with Albertsons acquisition

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Kroger pledges to reduce prices after Albertsons deal

, author of Illustration: Shoshana Gordon/Axios With inflation raging, Kroger on Friday pledged to use its proposed acquisition of rival Albertsons to reduce prices.That promise could help sell the deal. Still, experts and consumer watchdogs are split on whether a combined grocery chain behemoth will ultimately come to fruition. Driving the news: On Thursday, Kroger confirmed its for about $24.6 billion, in a deal that pairs up two of the nation's four largest food retailers.Part of the announcement: "Kroger plans to invest in lowering prices for customers and expects to reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers," the company said in a statement. State of play: Together, Kroger and Albertsons have about 5,000 stores, 4,000 pharmacies and about 2,000 fuel centers — not to mention dozens of distribution centers and manufacturing plants.In other words, their collective purchasing power is significant — so they should be able to extract concessions from their vendors.Albertsons has "long trailed Kroger in terms of their pricing, and I do think this can have a real positive impact," Ken Fenyo, a former Kroger executive who now serves as president of research and advisory at Coresight Research, tells Axios. Yes, but: Consumer watchdogs are questioning Kroger's sincerity, expressing concern about the impact on customers already grappling with surging food inflation."With food prices rising, the last thing Americans need is a supermarket merger that will spike food prices even further," Robert Weissman, president of Public Citizen, said in a statement. "Rejecting this merger proposal should be a no-brainer for federal antitrust officials,” he added. By the numbers: About 1 in 3 Kroger shoppers also frequent Albertsons locations — and the other way around, according to ShopperScape data provided by Kantar.Kroger's brands include Harris-Teeter, Fred Meyer and Roundy's, while Albertsons' include Safeway, Jewel-Osco and Acme. What to watch for: Whether the Biden administration seeks to block the deal, or extract concessions like the divestiture of sales.Coresight's Fenyo said Kroger may want to sell off some of its overlapping locations anyway — but on the whole, "there's plenty of competition" in food retail, he said.

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