Kroger CEO Rodney McMullen vowed at a congressional hearing Tuesday not to close stores or lay off frontline associates if the proposed merger between his company and Albertsons succeeds.
He and Albertsons CEO Vivek Sankaran testified before the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights at its afternoon hearing. They sought to assuage senators and the public about the proposed deal between Kroger — the parent company of Colorado’s largest retail grocery chain, King Soopers — and Albertsons, which operates Safeway stores.
“We will not close any stores,” said McMullen, who highlighted that he grew up in a union household. However, he plans to work with the Federal Trade Commission to divest some stores “to a viable competitor.”
McMullen’s statement that Kroger wouldn’t layoff “any frontline associates” includes positions at warehouses, manufacturing plants and stores.
But union workers Tuesday morning opposed the deal, with six United Food and Commercial Workers unions representing more than 100,000 Kroger and Albertsons employees in 12 states and Washington, D.C., gathering at the U.S. Capitol as the congressional hearing got underway. They asked state and federal regulators to halt the merger.
McMullen argues that the deal would give Kroger and Albertsons the flexibility and national footprint to better compete in the national grocery industry, while lowering prices for patrons, he said at the hearing.
Legally, the commitment to cost reduction isn’t binding, McMullen clarified, but it’s a business commitment to maintain a loyal customer base. The combined company will start immediately on that goal on “Day 1,” he said.
The merger would also let them expand their customer reach, and “improve proximity to deliver fresh and affordable food,” he said. The plan includes a boost to associate wages and benefits.
“Kroger currently is ranked fourth in total revenue among U.S. grocery retailers behind Walmart, Amazon and Costco,” McMullen said. “A combined Kroger and Albertsons will remain at number four as we will continue to compete with these companies to sell groceries.”
“I don’t see less competition going forward,” McMullen added.
The merger will result in the largest private-sector union retailer in the U.S., Sankaran said in his remarks. While the deal is currently in its “early days,” he said they’re holding discussions with the involved unions.
For employees saving for retirement, “our track record also includes ensuring that our pension funding obligations are met,” Sankaran said.
Claudia Morales, a floral manager at Safeway in Colorado Springs, thought about her two children in high school when she first learned about the proposed merger between Kroger and Albertsons.
“What happens if I lose my job? Do they get to go to college? Maybe, maybe not,” she said. The news “dropped on us like a bombshell.”
An employee for over three years, Morales already weathered the coronavirus pandemic as an essential worker, recalling bare store shelves that “looked like a war zone.”
Morales pointed to colleagues looking forward to retirement, which is now uncertain. “If this merger goes through, thousands of people are going to lose their pensions that they worked for their entire lives.”
Despite McMullen’s assurances, Morales also worries about potential store closures and the ripple effect on nearby community establishments, like laundromats and hair salons, which can lose out on customers as a result. “Those businesses are on the next chopping block. They’re out, too.”
“This is bad for Colorado,” Morales said.
The proposed $25 billion merger — approved by the boards of both companies — is expected to close in early 2024. But consumers, workers, government officials and more have raised questions about its potential impact, with Colorado Attorney General Phil Weiser in the process of launching an investigation into the deal.
Carol McMillian, bakery manager at King Soopers in Aurora, previously lost her job when Albertsons and Safeway merged. She worked at the latter for almost 11 years.
“And now we are here again,” she said. “Grocery workers are going to work every day, not knowing what is going to happen to their jobs next year.”
One of the reasons she opposes the merger is “the deterioration of neighborhoods when there is big empty lots,” as well as the proliferation of food deserts. A food desert is defined as a low-income area where a substantial share of residents lacks easy access to a large grocery store.
Andres Becerril, a King Soopers front-end supervisor in Denver, is another employee raising concerns about the threat to his and his coworkers’ livelihoods.
“Like me, hundreds of thousands of frontline essential workers spend most of our lives at our stores helping families put food on their table, regardless of the circumstance — during natural disasters, in the face of active shootings and, of course, in the pandemic,” he said at a Tuesday news conference.
After 12 years at King Soopers, Becerril now feels anxious about the potential loss of wages, benefits and healthcare coverage. Consumers could pay higher grocery prices, while farmers and ranchers could also hurt as “this new mega-company will control shelf prices with no competition,” he added.
Smaller Colorado cities, such as Durango, would suffer from the absence of competition between the industry giants, leaving the communities vulnerable to “major job cuts,” Becerril said.
Employees “want and need” Kroger and Albertsons to succeed, he added. “We just want them to thrive as separate entities.”
Subcommittee Chairwoman Amy Klobuchar, D-Minn., and ranking member Mike Lee, R-Utah, both expressed “serious concerns” about the merger.
“I will do everything in my power to ensure our antitrust laws are robustly enforced to protect consumers from anticompetitive mergers that could further exacerbate the financial strain we already feel in the grocery store checkout aisle,” Lee said in a statement.
