Why a Kroger-Albertsons Merger Would be Mostly Positive for Retail Landlords

The potential merger between grocery giants Kroger and Albertsons has drawn attention from retail analysts, but the people paying the most attention are anti-trust regulators. A Kroger and Albertsons hybrid would create a massive nationwide supermarket chain that could compete with Walmart and Amazon’s Whole Foods. The merged company would obtain distribution efficiencies, gain greater leverage with suppliers, and give a significant advantage in growth areas like e-commerce. A merger of this size in the grocery market could also have significant implications for retail center landlords.

Kroger and Albertsons’ CEOs are assuring lawmakers and customers that the $24.6 billion merger would lower prices, but not many are buying that. The companies’ two CEOs were recently grilled on Capitol Hill at a Senate subcommittee hearing. The companies will have to convince the Federal Trade Commission that the deal will have all the positive effects they’re saying it will have. Kroger is the second-largest grocery chain by market share in America (behind only Walmart), and Albertsons is fourth, behind Costco. The merger, in which Kroger would acquire Albertsons, would expand customer reach and improve proximity to deliver food to about 85 million U.S. households in 48 states. If the deal is approved by regulators, it’s expected to close in 2024, leading to the companies’ controlling 13 percent of the U.S. grocery market. This would ultimately lead to 60 percent of the U.S. grocery market being concentrated among five national chains. In theory, these companies could lower prices, but that type of consolidation typically

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