The price issue is especially salient, given public outrage over food prices. Writing earlier this month in The Washington Post, Abha Bhattarai and Jeff Stein reported that food prices rose 25 percent during the past four years, compared to an overall inflation rate of 19 percent. More than two-thirds of voters said, in a November poll by Yahoo Finance/Ipsos, that the increase in food prices hit them harder than any other kind of inflation. The price spike effectively ended last year, but food prices did not come down, and President Joe Biden has started accusing the grocery chains (not by name) of price gouging. Biden even complained about it in a Super Bowl ad. By reducing competition, further supermarket consolidation is virtually guaranteed to push food prices higher. Kroger has promised to invest $500 million after the merger to lower prices, but even if the merged company achieved a short-term price reduction, no sane person would count on that to last.
Store closings are another likely outcome from the proposed merger. Between 1994 and 2019, a period of furious consolidation in the supermarket sector, the number of individual grocery stores fell by 30 percent, according to an analysis by Food and Water Watch, a Washington-based nonprofit. To win approval for the Kroger-Albertsons merger, the two firms have pledged to sell off 413 stores to C&S Wholesale Grocers. The Washington state and Colorado complaints point out that Albertsons followed the same strategy when it purchased Safeway in 2015, offloading 146 stores to a regional supermarket chain called Haggen in order to secure regulatory approval.
It was a fiasco. Haggen, which was majority-owned by a private equity firm, was woefully unprepared to manage the expansion. Within seven months, it filed for bankruptcy and closed 127 of the stores. (Haggen, for its part, said its acquisition failed because Albertsons managed the handover indifferently, stiffing the new owners with insufficient inventory and poorly maintained facilities, among other problems.) Even if that history doesn’t repeat itself, a merged Albertsons-Kroger will quickly close down any Albertsons supermarket situated too close to a Kroger supermarket, or vice versa. The deleterious impact of dwindling grocery stores will be felt the keenest in rural America; National Public Radio reported last year that 76 counties nationwide already lack a single grocery store.