The Battle for Grocery Access: How the Kroger-Albertsons Merger Could Impact Food Deserts

The Rockwood neighborhood, located just a dozen miles from Portland, has experienced a dramatic shift in its grocery landscape over the past 25 years. Once home to three supermarkets, Rockwood now finds itself with only one remaining grocery store, an Albertsons. This transformation has turned Rockwood into a food desert, a term used to describe areas with limited access to affordable and nutritious food. With a population of 40,000 and a high poverty rate, the disappearance of supermarkets has had a profound impact on the community. Residents like Serge Mutalimba, who has lived in Rockwood for over two decades, have witnessed the closure of multiple supermarkets and now face longer commutes to buy groceries.

Mutalimba’s experience is not unique. Many Rockwood residents have had to adapt to the changing grocery landscape, often relying on public transportation to reach the sole remaining supermarket. The future of this Albertsons is uncertain, as it is currently entangled in a legal battle that could determine its fate. Kroger, the largest supermarket chain in the United States, has made a $24.6 billion bid to acquire Albertsons. While Kroger claims that no stores will be closed as a result of the merger, the Federal Trade Commission (FTC) has filed a lawsuit to block the acquisition, citing concerns about reduced competition in the grocery industry.

The FTC argues that the merger could lead to higher prices and potential store closures, exacerbating the food insecurity already felt by communities like Rockwood. The hearing to determine whether the merger can proceed began recently and is expected to last until Friday. The outcome of this trial could have significant implications for Rockwood and similar neighborhoods across the country. Gentrification has already pushed many lower-income families to the outskirts of cities like Portland, and the loss of accessible grocery stores only adds to their challenges.

Rockwood is a diverse neighborhood with a significant Latino population, making up around 25% of its residents. The local food pantry serves a wide range of community members, with Spanish and Russian spoken as frequently as English. The disappearance of supermarkets in Rockwood highlights the broader issue of food deserts and the critical role that competition plays in the grocery industry. Limited access to affordable groceries affects all residents, regardless of race or ethnicity, and underscores the importance of maintaining a competitive market.

The ongoing trial in Portland is not the only legal challenge facing the Kroger-Albertsons merger. States like Colorado and Washington have also filed lawsuits to stop the deal, raising similar concerns about competition and the potential impact on consumers. These state-level cases are set to begin this month, adding another layer of complexity to the already contentious merger. If Kroger loses the federal case, the merger may be abandoned due to the high costs of continued legal battles. However, the government could choose to keep fighting the merger even without an injunction.

Kroger announced its intention to acquire Albertsons in October 2022, with plans to buy all outstanding shares. To address concerns about reduced competition, Kroger has agreed to sell 579 stores to C&S Wholesale Grocers. This divestiture is intended to create a new competitor in the grocery market, but it remains to be seen whether this will be enough to satisfy regulators. If the merger is approved, Kroger would operate over 4,400 supermarkets and employ 640,000 workers, making it a formidable player in the industry.

Kroger believes that the merger will allow it to become more efficient and better compete against retail giants like Walmart, Costco, and Amazon. The company has promised to cut grocery prices by $1 billion if the merger goes through, a pledge aimed at alleviating concerns about rising food costs. However, both federal and state regulators remain wary of the potential consequences for competition and job security. The outcome of the trial will have far-reaching implications, not just for Kroger and Albertsons, but for the entire grocery industry and the communities they serve.

The drama surrounding the Kroger-Albertsons merger has been further intensified by the company’s upcoming earnings report. Consumers, already feeling the strain of higher grocery prices, are closely watching to see how Kroger’s financial performance will reflect their experiences with inflation. The debate over whether companies are taking advantage of higher costs to increase profits is a hot topic, and Kroger has found itself at the center of this controversy. The company’s earnings report is expected to provide insight into its financial health and its role in the broader inflation narrative.

Kroger’s CEO, Rodney McMullen, has testified in court, attributing higher grocery prices to factors like credit card swipe fees and fuel costs. McMullen insists that rising operating and supplier costs are to blame for the price increases, not the company’s pricing strategies. He has also stated that if the merger with Albertsons is approved, prices will not be raised. However, internal emails questioned in court have suggested that retail inflation for items like milk and eggs has outpaced cost inflation, raising concerns about the company’s commitment to keeping prices low.

The issue of grocery prices has become a significant political talking point, with presidential nominees weighing in on the matter. Vice President Kamala Harris has proposed a federal ban on price gouging for groceries, while former President Donald Trump has vowed to reduce the cost of living by lowering energy prices. These proposals have received mixed reactions from business executives and economists, with many experts skeptical about the feasibility of such promises. The ongoing legal battle and political discourse underscore the complexity of addressing rising grocery prices and ensuring access to affordable food.

As the trial in Portland continues, the future of Rockwood’s Albertsons hangs in the balance. The outcome of this case will have a direct impact on the community, potentially determining whether residents will continue to have access to a nearby supermarket. The broader implications of the Kroger-Albertsons merger extend beyond Rockwood, highlighting the challenges faced by lower-income communities and the potential effects of gentrification. The disappearance of supermarkets in food deserts like Rockwood serves as a stark reminder of the importance of competition in the grocery industry and the need for policies that promote equitable access to food.

Susan Morris, who is set to lead C&S Wholesale Grocers if the merger goes through, hopes to create a store network that will increase competition in the industry. Initially disappointed by the need to sell stores as part of the merger, Morris now sees it as an opportunity to make these stores unique to Kroger and Albertsons. With over 38 years of experience in the grocery retail industry, Morris is excited about the prospect of leading C&S and believes that the merger is necessary to enhance competition. However, the process of changing the names of 286 stores will take place over a two-year timeframe, adding another layer of complexity to the transition.

In previous deals, such as the sale of over 200 Safeway stores to another company that eventually went bankrupt, the outcomes have been less than ideal. C&S has plans to grow its business once it acquires the 579 stores, but the success of this endeavor remains uncertain. The role of competition in the grocery industry cannot be overstated, and the potential consequences of the Kroger-Albertsons merger will be closely watched by regulators, consumers, and industry experts alike. The trial’s outcome will shape the future of grocery access in communities like Rockwood and set a precedent for how similar mergers are handled in the future.