Last month, Kroger announced plans to buy Albertsons in a deal worth $24.6 billion that would unite two of the nation’s largest grocery chains.
The combined company would operate about 5,000 stores across 48 states and employ about 710,000.
But the merger could result in fewer jobs, fewer stores and higher prices at the checkstand, union officials say.
Lori Flynn has worked at the Marysville Albertsons store for 10 years. Her husband, Kevin Flynn, a meat-cutter, works there too.
“It would be a monopoly, and prices would be terrible,” Lori Flynn said while passing out flyers on her break Nov. 9. “They’d have control over way too much.”
Lori Flynn worries the company would shut down stores and lay off workers.
“There’s a Safeway down the street and a Fred Meyer within a couple miles,” Lori Flynn said. “I can see them saying, we can’t have all three of them.”
United Food and Commercial Workers 3000, UFCW 367 and Teamsters 38 represent the Flynns and more than 35,000 Washington employees of Kroger and Albertsons.
Kroger, whose brands include QFC and Fred Meyer, has about 120 locations in Washington. Albertsons operates more than 220 stores in the state.
Many shoppers who took one of the flyers, said they too worried about a monopoly that would raise prices.
In September, grocery prices were up 13% over the year, mostly due to inflation.
“Competition is always good for prices,” said Jeremy Storseth as he walked into Albertsons to buy groceries.
One aspect of the merger is particularly worrisome, unions officials say. The proposed deal includes a $4 billion payout to shareholders before the merger is approved by regulators.
Approval is expected to take a year or more, extending into 2024.
The distribution, which had been scheduled for Nov. 7, was paused last week by a temporary restraining order issued by King County Superior Court after state Attorney General Bob Ferguson filed a lawsuit to block the payout, deemed a special dividend.
A follow-up hearing on Nov. 10 extended the block through Nov. 17.
“Once this dividend is paid out, it will be impossible to recover,” Tom Geiger, special projects director for UFCW 3000 special projects director said.
The attorney general and union leaders contend the cash payment would make it difficult for Albertsons to remain competitive during the review process.
“This dividend would cripple Albertsons’ ability to operate its stores, threatening the jobs of thousands of essential grocery store workers and making groceries more expensive and scarce for millions of families,” said Sam Kantak, secretary-treasurer of Teamsters 38.
Union officals say the $4 billion should instead be used to reduce food prices, improve worker pay, increase staffing and boost security and safety measures at grocery stores hit by retail theft.
Union officials are calling on federal and state regulators to step in and do what’s necessary to protect workers and shoppers.
Analysts say the merger could help the two firms compete against Walmart, the country’s leading grocery retailer.
According to Foodindustry.com, Walmart chalked up $467 billion in retail grocery sales last year, followed by Amazon with $239 billion; Costco with $141 billion and The Kroger Co. with $137 billion. Albertsons reported $71 billion.
If Kroger and Boise-based Albertsons are no longer competing, the new super giant “would have a greater ability to dedicate its resources to taking on Walmart head-on. Joining forces could also help the grocers pull well ahead of other major retailers with grocery businesses such as Amazon and Costco,” PYMNTS, an online retail and financial publication, reported.
Last year, grocery sales in the U.S. topped $800 billion. With revenue expected to rise, competition is fierce.
In a news release, Kroger said it “has a long track record of lowering prices, improving the customer experience and investing in its associates and communities. Consistent with prior transactions, 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 expects the merger would strengthen its supply chain, expand its fresh food offerings and bring products from “field to table to more customers more quickly.”
However, some analysts say the deal could result in the closing of “400 locations to keep regulatory scrutiny at bay,” PYMNTS reported.
“If there is a merger, it will potentially be detrimental to shoppers. It will limit the choices that they have to shop which could potentially drive up grocery prices,” said Tammi Brady, a Teamster representative.
Brady pointed to the 2015 Safeway-Albertsons merger as a harbinger of things to come.
The merger resulted in the closure of more than 160 stores across the two companies’ multi-state network.
It was devastating for so many, Brady said. “Some meat cutters lost their jobs and didn’t come back.”
Teamsters General President Sean M. O’Brien said the proposed merger “will have serious implications for the more than 18,000 Teamsters employed at both companies.” He called the deal another example of why real antitrust reform is needed.
“Historically, mergers of this magnitude have a negative impact on workers and the public. Less competition almost always means higher prices and fewer choices,” O’Brien said.