The Kroger Co. is sharing additional insights about how the company lowered prices via previous mergers and plans to do the same through its proposed deal with Albertsons Cos.
“We believe the way to be America’s best grocer is to provide great value by consistently lowering prices and offering more choices. When we do this, more customers shop with us and buy more groceries, which allows us to reinvest in even lower prices, a better shopping experience and higher wages,” said Rodney McMullen, chairman and CEO of Kroger.
“We know this model works because we’ve been doing it successfully for many years, and this is exactly what this merger will bring customers – lower prices and more fresh, affordable choices.”
The Kroger-Albertsons agreement is set to close this year, subject to regulatory clearance and customary closing conditions.
According to Kroger, its investment in lower prices has resulted in $5 billion in customer savings since 2003. The retailer offered an analysis that puts this investment into context and includes additional details. Specifically, the analysis contends that Kroger has:
- Lowered prices and improved the customer experience during previous mergers
- Kroger invested more than $125 million to lower prices at Harris Teeter after its merger in 2014 and more than $100 million to lower prices at Roundy’s after its merger in 2016.
- In addition, Kroger invested $2.5 million and $2.4 million in capital per Harris Teeter and Roundy’s store, respectively, to enhance the customer experience in the three years following each merger.
- Reduced profits so groceries remained affordable for families nationwide
- Kroger’s work to lower prices in the last 20 years reduced its gross margin by 5 percent. Meanwhile, Amazon, Ahold Delhaize, Walmart and Dollar General have increased gross margins by 22 percent, 4 percent, 1 percent and 2 percent, respectively, during the same time period.
- Made commitments to lower prices and improve the customer experience post-merger
- As soon as the transaction closes, Kroger will invest $500 million to lower prices. Kroger also will spend $1.3 billion to improve Albertsons’ stores following the merger.
- Will be able to invest more to support customers and some 700,000 associates by combining with Albertsons
- The company believes that the merger will allow it to attract and retain more customers by lowering prices, creating a more personalized experience and expanding its selection of fresh food. By doing so, Kroger expects to grow revenues and drive additional investments in pricing and store improvements, as well as wages and benefits.
Read more about the merger between The Kroger Co. and Albertsons Cos. from The Shelby Report.
C&S To Purchase 413 Stores From Kroger, Albertsons Proposed Merger
