Grocery mega-merger would hurt food availability
There is an African proverb that goes, “when elephants fight, it is the grass that suffers.”
The owners of America’s two largest full service grocery chains, Kroger and Albertsons, have proposed a megamerger that would control more than 1/3 of the food sold in the USA. If these corporations merge, it’s the rest of us that will bear the consequences.
Locally, Kroger and Safeway (Albertsons) are the major grocery retailers. Consolidating would increase their (existing) monopoly, negatively affecting food availability, affordability and accessibility in our city. Reducing or eliminating competition in the conglomerate grocery markets means regular citizens will pay the price of less consumer choice, weakened economic prospects for farmers, and economic security for grocery store workers.
According to the American Prospect, Kroger and Albertsons collectively amass a quarter of a trillion dollars in sales, and “private equity is notorious for loading grocery chains with debt, paying themselves millions in dividends, and then selling chains through a public offering or acquisition.”
Hedge funds’ profits threaten farmers, consumers, food access, union jobs and pensions, and other food systems workers —resulting in higher grocery bills, lost jobs, lower wages, and less competition in our local food systems.
Federal Trade Commission antitrust laws require megamergers like this to clear safeguards, so the hedge funds are proposing to sell 413 Kroger/Albertson stores, eight distribution centers and two regional offices to C&S.
Up to 50 could be in Colorado, with maybe as many as a half dozen store spinoffs in the Pikes Peak region (out of 250 Kroger & Albertsons stores statewide). Experts in running a distribution center (like C&S) do not necessarily have the expertise to run grocery stores, hence they gamble their most ‘precious commodity’:their workers. Wholesalers are positioned to have more interest in the value of the real estate than stakes in the grocery market. Past antitrust measures by Albertsons/Safeway show us as much; they sold stores to Dominicks and then proceeded to overcharge them for products, to the extent that Dominicks went bankrupt and closed all their stores in less than a year. Locally, the Albertsons on Southgate and Palmer Park closed and never reopened.
This fall, Kroger CEO Rodney McMullen, met with the Colorado Springs Chamber of Commerce in a private meeting at The Broadmoor to upsell the benefits a proposed merger would have for Pikes Peak residents, but there is not a shred of evidence (disinvestment included) in mergers’ past, to indicate this would be the case. In fact, the acquisition between Alberstson’s and Safeway in 2015 has been referred to as: “if not the biggest embarrassment in recent FTC history, possibly the fastest.”
As it is, commodity sales farmers receive on their produce has plummeted to 14.3 cents on the dollar over the last decade, according to the USDA. Not only will monopolized grocery distribution likely push smaller grocers out of the market, but with less negotiating power farmers will be on the short end of the stick in selling their goods at prices that are sustainable to their livelihood. The Rocky Mountain Farmers Union has asked Colorado Attorney General Phil Weiser to do all that he can to block this merger from going through.
By creating a monopoly over roughly 22 percent of the grocery market, the Kroger/Albertsons merger would result in fewer stores, higher prices and less options affecting the fresh and healthy foods that consumers have access to. For cities like ours that are not adequately invested in public transportation to the level of responsiveness of those who depend on it, fewer full-service grocery stores means greater distance to nutrition, and increased hunger in our communities.
The front-line workers who serve and sell food to our communities don’t necessarily fare any better either. Three-fourths of Kroger workers are food insecure, a rate seven times higher than the national average according to a study conducted by The Economic Roundtable (of Kroger workers in Washington, Colorado and California). There was a time when being a grocery store associate, similar to a postal worker, was a trade skill that afforded entrance into the middle-class. Those days are long gone and are becoming more distant mega-merger by mega-merger.
These workers can’t afford to lose their pensions when a high-stakes dicey deal goes belly up.
Experts in running a distribution center (like C&S) do not necessarily have the expertise to run grocery stores, hence they gamble their most ‘precious commodity’: their workers. C&S is a wholesaler, not a retailer, and as such they are far more interested in the value of the real estate in this deal than their stake in the grocery market. Additionally, a new owner is not beholden to honor contracts of the previous owner. In this lopsided environment, workers have less negotiation power over their wages, benefits, and working conditions.
In the one local King Soopers ( Kroger) store serving the entire southeast region of our city, it was an employee who discovered the asbestos that led to the store’s closure for multiple months. When lawsuits start piling up due to health conditions, doesn’t it make sense from a corporate bottom-line perspective, to close the stores losing money?
Corporate profit margins usually affect low-income communities the most. This summer and fall, southeast Colorado Springs experienced firsthand the impact on the local community when a grocery store closes. Just food access was a problem before the Hancock and Academy King Soopers closed, so it will remain after its recent reopening.
We need grocery stores, yes, and we also need solutions that target the root causes of food inequity: income, housing and transportation. Solutions do NOT involve threatening workers incomes and precious pensions, distancing food access points by closing stores, and giving farmers even less on the dollar for their produce.
“Right now, there is not a lot of reason not to sue” to block the merger, says California Attorney General Bob Bonta. Outside of pocket-liners, our concerns are shared across the political aisle.
Colorado Attorney General Phil Weiser will present Colorado’s position on the proposed merger to the Federal Trade Commission in early 2024. Please join us in urging him to stop this disastrous, anti-competitive, anti-consumer, anti-worker, anti–farmer, anti-family megamerger from being permitted to go forward.
Patience Kabwasa is a long-time resident of Colorado Springs and the executive director of Food to Power a nonprofit organization cultivating a more equitable food system in the greater Colorado Springs community.