Southern California grocery workers who fiercely oppose a planned $24.6 billion Kroger/Albertsons merger vented their concerns Friday, Jan. 26 in a virtual press conference.
They say a union of the two mega supermarket chains would undermine competition, hike prices and result in job losses and store closures. But Kroger says opponents of the plan are spreading “false and misleading information.”
The Federal Trade Commission is expected to soon weigh in on the proposed merger.
With nearly 5,000 stores, 700,000 employees and 15% of the national market share, the newly created grocery giant would encompass scores of banners, including Vons, Ralphs, Safeway, Fred Meyer, King Soopers, Harris Teeter,Vitacost, Randall’s, Haggen, Shaw’s and Jewel-Osco.
The resulting company would be second only to Walmart/Sam’s Club in grocery volume, enabling four chains to control 60% of U.S. grocery sales.
Kroger and Albertson plan to appease federal regulators by selling off more than 400 stores to C&S, the industry’s largest privately owned wholesaler. Most of the divestments would occur on the West Coast, according to Forbes. That includes Ralph’s and QFC, where Kroger and Albertsons have higher combined market shares.
John Marshall, capital stratagies director for the United Food and Commercial Workers International union (UFCW), which represents the grocery workers, doesn’t put much faith in C&S.
“C&S has no track record of successfully running grocery stores,” Marshall said. “If you look at their revenue over past six years, its been declining significantly — and they are clearly not a pro-union company.”
Marshall cited Washington Attorney General Bob Ferguson’s recent lawsuit against Kroger and Albertsons over the proposed merger.
The action claims it will “severely limit” grocery store competition in many areas of the state and eliminate competition to keep prices low.
Ferguson also challenged the grocery chains’ plan to sell off 104 stores in his home state of Washington, arguing the sales will set up the stores to fail and increase unemployment.
“The Washington attorney general also uncovered an internal communication where company execs acknowlegded the merger would create a monopoly,” Marshall said.
In a statement issued Friday, Kroger said “false and misleading information” continues to be used by opponents of the planned merger.
“The facts are clear – this merger is inherently pro-union, and we have the track record to prove it,” the company said. “Kroger added more than 100,000 good-paying union jobs since 2012 and invested $1.9 billion to grow associate wages and industry-leading, comprehensive benefits since 2018.”
The company added that Kroger and C&S have pledged that “no stores will close and no frontline workers will be laid off as a result of the merger.”
Still, many workers are worried.
Grace Garcia, who works at a Vons in Glendale, is leery of the merger — and for good reason. She previously worked at an Albertsons in Burbank that became a Haggen supermarket when the Bellingham, Wash.-based grocer took over scores of Albertsons and Vons stores.
“When Haggen came in they were all gung ho, making all kinds of promises,” the 49-year-old Paramount resident said. “But they filed for bankruptcy six months later and I was out of work for three months. My concern is that the Kroger/Albertsons merger would be Haggen 2.0.”
Burt Flickinger III, managing director for the retail consulting firm Strategic Resource Group, noted in an Oct. 23 posting on progressivegrocer.com that Albertsons put itself up for sale nearly two years ago and undertook a comprehensive review of strategic alternatives.
“The Kroger transaction is the best outcome for union workers, customers and communities,” he said. “If the deal is blocked, Albertsons — which is still majority-owned by private equity, with private equity having significant influence on Albertsons’ future — will remain for sale.”
And that, he said, could result in selling off the Albertsons portfolio in pieces, resulting in thousands of union jobs lost. By contrast, Kroger won’t close any stores or lay off any store associates as a result of its merger, Flickinger said.
