Beset with criticism and regulatory scrutiny about the possibly anti-competitive results of a merger with Albertsons Co., The Kroger Co. is answering with a declaration of how the company lowered prices after previous mergers.
Kroger stated it has invested to lower prices consistently since 2003, resulting in $5 billion in customer savings and providing more affordable products to families across the United States. The company pointed to its history and maintained it had consistently lowered prices and improved the customer experience during previous mergers. For example, it 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, the company noted. In addition, Kroger asserted it had 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.
Kroger also stated it had reduced profits to ensure groceries remained affordable for its customers, with ongoing work to lower prices during the past 20 years, reducing its gross margin by 5%. Meanwhile, Kroger indicated Amazon, Ahold Delhaize, Walmart and Dollar General have increased gross margins by 22%, 4%, 1% and 2%, respectively, in that time period. Kroger added it would invest $500 million to lower prices following the merger with Albertsons the day following the transaction close while investing $1.3 billion to improve Albertsons’ stores to better serve customers.
According to Kroger, post merger, it would become more competitive and able to invest additional funds to support customers and more than 700,000 employees. At that point, the company said, the supermarket operator expects to grow revenues and drive additional investments in pricing and store improvements, as well as wages and benefits.
“We believe the way to be America’s best grocer is to provide great value by consistently lowering prices and offering more choices,” Rodney McMullen, Kroger chairman and CEO said. ” 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.”
