Kroger Promises Product Price Cuts If Albertsons Merger Approved

Kroger has reportedly doubled the value of price cuts it has committed to making if its merger with Albertsons goes through.

The grocery store operator plans to lower prices by $1 billion, a figure that’s up from the $500 million in cuts it previously committed to make, Bloomberg reported Thursday (Aug. 15), citing a Kroger spokeswoman.

Kroger made the commitment to appease regulators at a time when the merger is facing a federal court challenge, two state lawsuits and a Federal Trade Commission (FTC) administrative trial, according to the report.

The merger has also been criticized by elected officials and unions, who have said that the deal could lead to higher prices and lower wages, per the report.

Kroger and Albertsons have also said that they would increase worker wages by $1 billion and improve Albertsons stores with a $1.3 billion investment, according to the report.

In the past, Kroger has fulfilled similar commitments in connection with other transactions, the report said. It spent more than $100 million to cut prices on products after acquiring Roundy’s in 2015 and invested $125 million in lowering prices following its purchase of Harris Teeter a decade ago.

Kroger announced its planned $24.6 billion merger with Albertsons in October 2022, saying the deal would boost its capabilities.

“As a combined entity, we will be better positioned to advance Kroger’s successful go-to-market strategy by providing an incredible seamless shopping experience, expanding Our Brands portfolio, and … we’ll also be able to further enhance technology and innovation,” Kroger Chairman and CEO Rodney McMullen said at the time in a statement.

In April 2023, amid criticism of their pending merger, McMullen and Albertsons Companies CEO Vivek Sankaran co-authored an op-ed in The Cincinnati Enquirer saying that the merger will lower prices.

“Customers look to us to provide high-quality, affordable groceries — particularly today,” they wrote. “At Kroger, our business strategy is to lower prices year over year, attracting more customers and earning their loyalty.”

In February, the FTC announced its intention to sue to prevent the merger, asserting that the proposed union would likely lead to increased prices for consumers and diminished wages for workers.

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.