18 October, 2022

Kroger and Albertsons merger would transform US grocery

Louise Taylor
Kroger - Albertsons Merger Map & Figures
Kroger – Albertsons Merger Map & Figures ; Source: Kroger

 

Kroger and Albertsons are on track to merge, signaling an exciting change for the US grocery sector. The firms are the fourth and ninth largest grocery retailers by revenue in the country. Both boards have approved the merger, which is now subject to federal approval.

“A merger of this scale has the potential to deliver major change in the retail grocery sector,” comments Drew Hopp, Northfork‘s Head of Sales, US. “The combined resources and nationwide footprint of Kroger and Albertsons present an outstanding opportunity to scale up digital offerings, investment, and alternative profit. The customer will benefit from increased personalization, inspiration, and savings, and a growing part of that will be shopping with recipes.”

Serious scale

A Kroger-Albertsons merger has the potential to combine two grocery heavyweights and upend the US grocery industry.  Both retailers are financially strong, with Kroger and Albertsons revenue rising to over $137 billion and $71 billion in 2021, respectively. The size of the combined entity would provide larger economies of scale, lower costs, and greater investment in people, technology, stores and shoppers.

The union of Kroger and Albertsons would also grant the companies a national reach, as their combined 5,000 stores have complementary footprints. As the largest traditional grocer in the US, Kroger serves approximately 60 million households.  Combining with Albertsons increases the number of households served to almost 85 million, roughly 70% of the nation’s total.

Future growth and investment

As a result of a merger, Kroger sees the potential for $1.5 billion in yearly alternative profits.  Profits from alternative revenue and the core business make additional investments possible. As part of the merger, Kroger plans to invest around $500 million to lower prices for shoppers. It also plans to spend $1.3 billion enhancing stores and $1 billion increasing associate wages.

Northfork’s Drew Hopp concludes:

“The Kroger and Albertsons merger provides an exciting opportunity to win with customers, invest in technology, and grow retail media.  They will make big bets, and continue to serve customers wherever and whenever they want to shop.  Retailers of all sizes will need to respond, and shopping with recipes will unquestionably play an important role at Kroger and beyond.”

About the author

Louise Taylor


Louise is Northfork’s editor and is passionate about all things food.