Kroger promises to lower prices, invest in stores following merger
The Kroger Co. has detailed its commitment to customers as it faces regulatory scrutiny over its proposed acquisition of rival Albertsons Cos.
The supermarket giant said, consistent with its previous approach to mergers, it will lower prices following its merger with Albertsons. It plans to invest $500 million to lower prices following the close of the deal — starting day one. It also will also invest $1.3 billion to improve Albertsons' stores.
Kroger noted that this strategy is not new. The company 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.
Additionally, Kroger said it 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.
The supermarket retailer added that its ongoing work to lower prices in the last 20 years reduced its gross margin by 5% while Amazon, Ahold Delhaize, Walmart and Dollar General have increased gross margins by 22%, 4%, 1% and 2%, respectively, during the same time period, according to Kroger.
"We believe the way to be America's best grocer is to provide great value by consistently lowering prices and offering more choices,” stated Rodney McMullen, chairman and CEO of Kroger. 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. 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."
Kroger has also said it will protect union jobs and that no stores will close or front-line employees lose their jobs as a result of the merger. It will invest an incremental $1 billion to raise wages and comprehensive benefits for all associates post-close.
After the deal closes, Kroger said it will provide 700,000-plus part- and full-time associates access to its continuing-education benefit, which offers up to $21,000 of reimbursement toward higher learning or continued development.