When
Kroger and Albertsons agreed to a $24.6 billion merger in 2022, the companies
framed it as a scale-driven solution to inflation, competition from Walmart and
Amazon, and a rapidly changing food retail landscape. Two years later, the deal
collapsed under Federal Trade Commission scrutiny—and now, in 2026, both
companies are asking a federal court to keep portions of expert testimony from
that failed merger sealed, calling it “highly confidential.”
At
this point, the more relevant question for the food industry is not why
they want the testimony sealed, but why the merger was ever positioned as a
good idea in the first place. From a food marketing, consumer trust, and
competitive dynamics perspective, the Kroger–Albertsons merger failed on
fundamentals long before it failed in court.
Below
are seven fact-filled food marketing data points that explain why this merger
was a bad idea from the start.
Seven Food Marketing Facts That Undermined the Merger
1. Consumers Already Perceive Grocery Consolidation as
Inflationary
According
to multiple FMI and Gallup consumer sentiment studies (2022–2024), over 60% of
shoppers believe large grocery mergers increase prices rather than lower
them. The merger narrative promised “lower prices through scale,” but consumer
belief moved in the opposite direction—eroding trust before integration ever
began.
2. Price Sensitivity in Grocery Is at a 20-Year High
NielsenIQ
data shows that more than 75% of U.S. grocery shoppers now actively compare
prices across banners, digital ads, and apps. In this environment, a
mega-merger that reduces banner diversity signals less competition, not
more value—exactly the opposite of what price-sensitive consumers reward.
3. Private Label Was Already Saturating Returns
Both
Kroger and Albertsons leaned heavily on private label growth as a justification
for scale. Yet Circana data shows private label share growth began flattening
in 2023 as quality parity was achieved. Merging two mature private-label
portfolios offered diminishing marginal returns, not breakthrough growth.
4. Local Assortment Drives Loyalty—Not National Scale
Food
Marketing Institute research consistently shows that local assortment, regional
brands, and store-level autonomy are top drivers of loyalty. A nationalized
merchandising strategy—inevitable under a merger of this size—would have
reduced local relevance, especially in fresh, prepared foods, and regional
ethnic categories.
5. Labor Instability Is a Direct Sales Risk
Unionized
grocery banners already struggle with turnover and morale. Public labor
opposition to the merger created measurable brand risk. McKinsey retail
benchmarks show that stores experiencing labor disruptions see same-store sales
declines of 3–7% in the following quarters.
6. Digital Grocery Growth Rewards Speed, Not Size
Online
grocery growth (pickup, delivery, and quick commerce) favors operational
agility, not organizational complexity. Walmart, Amazon, and regional players
outperformed legacy grocers by simplifying decision-making—not by adding layers
of integration risk.
7. Regulatory Risk Has Become a Material Brand Liability
Post-2020
antitrust enforcement is no longer theoretical. Edelman Trust Barometer data
shows declining trust in companies perceived as “gaming the system.” The FTC
challenge itself became a reputational drag, reinforcing consumer and supplier
skepticism.
Three Strategic Stumbles Kroger and Albertsons Both Made
1. They
Marketed the Deal to Wall Street, Not to Shoppers
The merger was framed in terms of EBITDA, synergies, and scale efficiencies—not
shopper outcomes. Consumers never heard a compelling why that mattered
to their weekly grocery trip.
2. They
Overestimated Divestitures as a Credible Fix
Promising to sell hundreds of stores ignored the reality that divested assets
often struggle without scale, talent, and capital—weakening competition rather
than preserving it.
3. They
Underestimated the Optics of Power Concentration
In an era of heightened sensitivity to corporate concentration, the optics of
two top-five grocers combining overwhelmed any operational logic.
Two Reasons We’ve Had Enough—and Why It’s OK to Keep This
Private
1. The
Market Has Already Rendered Its Verdict
The merger failed. The rationale has been dissected by regulators, trade press,
labor groups, suppliers, and consumers. Re-litigating expert testimony adds
little value to the public conversation.
2. Transparency
Does Not Mean Endless Repetition
There is already a vast public trial record. At some point, continued
disclosure becomes noise, not insight. The industry benefits more from
forward-looking innovation than backward-looking justification.
In
this context, keeping certain testimony sealed is less about secrecy and more
about acknowledging that the debate is settled.
Two Insights from the Grocerant Guru®
1. Scale
Without Shopper Relevance Is a Growth Dead End
The future of food retail belongs to brands that combine trust, transparency,
and local relevance—not those that chase size for its own sake.
2. The
Next Competitive Advantage Is Cultural, Not Structural
Winning grocers will invest in people, fresh food credibility, and frictionless
convenience. No merger can substitute for that.
Think
About This:
The Kroger–Albertsons merger wasn’t stopped by regulators alone—it was undone
by flawed assumptions about consumers, competition, and credibility. At this
stage, keeping parts of that bad idea out of the public spotlight may be the
most practical decision both companies have made since 2022.
Let’s Build a Partnership for Growth
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impact? Success leaves clues—and we may have the exact insight you
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Solutions®.
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