Critic says merger of grocery giants would hurt Alaskans: ‘You can pretty much name your price’

The Midtown Mall in Anchorage. (Photo by Zachariah Hughes/Alaska Public Media)

More than a month after announcing that Kroger and Albertsons grocery stores will merge, the corporations have no explanation for how it will affect Fred Meyer and Safeway customers in Alaska.

The corporations announced the merger agreement Oct. 14, posting online video statements from their CEOs.

“The combination of Kroger and the Albertson companies is a tremendous opportunity to bring together two highly complementary organizations,” said Kroger Chairman and CEO Rodney McMullen, who promised efficiencies and a “world-class shopping experience.”

But Alaskans are worried about jobs and the downsides of such a merger. Kroger runs Alaska’s Fred Meyer stores, and Albertsons runs Carrs Safeway stores.

“And what that means when they say they’re getting more efficient, which is how they sort of sell this, is they mean they’re firing people,” said Graham Downey, a consumer advocate with the Alaska Public Interest Research Group. “It means you had two grocery stores and now you have one. So, you have half as many employees, but all the same customers.”

The two grocers are among Alaska’s largest employers. Currently, Safeway stores are unionized and Fred Meyer stores are not. The United Food & Commercial Workers Union Local 1496 has been negotiating with Fred Meyer but has not commented on that or the merger.

Nationally, Kroger is the nation’s second-largest supermarket chain and Albertsons is the fourth-largest grocer.

Vivek Sankaran, the current CEO of Albertsons, said the new company will upgrade stores and expand the brands they sell.

“Together we’ll be able to create a premier omnichannel retailer and provide even more personalized service to customers across the country,” Sankaran said.

If the deal is allowed, Kroger would buy Albertsons for $24.6 billion. The new company would be as big as Walmart and Amazon, with nearly 5,000 stores serving 85 million households across the U.S.

It would also have a huge database of national consumer behavior data, which some analysts are calling the real prize, because it could be used to generate billions in revenue. Just one grocer would run the companies’ many regional chains, such as Harris Teeter, Ralphs, QFC, King Soopers, Vons, Safeway, Jewel Osco, and Acme.

But in Alaska, where the supply chain is vulnerable, consumers care more about food security.

There are some independent grocers in Alaska, niche stores like the Roaming Root in Fairbanks, IGA stores and the member-owned cooperative in Fairbanks. Smaller chains include the Alaska Commercial Company with 33 stores serving rural communities, and the emerging Three Bears chain with 11 stores. There are also national wholesalers like Costco and Walmart, which has 10 stores in Alaska — not all of which sell groceries.

But the 12 large Fred Meyer and 35 Carrs Safeway stores are the major competitors in the Anchorage, Fairbanks, Juneau, Kenai-Soldotna and Palmer-Wasilla areas. They serve more Alaskans in those population centers than any other retailers.

In many Alaska towns, like Fairbanks, the Safeway and Fred Meyer stores are across the street from each other. Downey said if the merger goes through, one of those stores would close.

“And then you have market power — the power to set the prices,” Downey said. “You don’t have the competitor across the street making sure you don’t have a crazy price on milk or cucumbers. You can pretty much name your price and people are gonna have to pay it.”

Repeated calls and emails to Kroger and Albertsons corporate offices over the last month were not returned.

The merger will take some time and is planned for early 2024. But first, it has to pass antitrust standards. Attorneys general in Washington state, Illinois, California and the District of Columbia have now filed suits to prevent various aspects of the merger, including the fear of an illegal monopoly that will hurt consumers in the long run.

Two Alaska legislators have written a letter to the Federal Trade Commission explaining Alaska’s unique shipping situation, asking the FTC to investigate the potential for price hikes following the Kroger-Albertsons merger.

Downey said the FTC has begun to examine the deeper ramifications of such mergers.

“The federal regulators are starting to look at market power,” he said. “Prices might be less in the short term, but in the long term what kind of economy are we creating here? Are we creating a diversified economy of lots of local businesses that’s keeping money circulating within our state, or are we making a tiny number of shareholders very rich?”

AKPIRG is asking consumers to sign a letter to Alaska’s congressional delegation urging them to oppose the merger.

On the merger website, the corporations say that until the transaction closes, Kroger and Albertsons will remain separate, independent companies.

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