Kroger to lower prices following merger with Albertsons

Kroger today shared additional insights about how the company lowered prices in previous mergers, bolstering its commitment to lower prices and add more choices following its proposed merger with Albertsons.

"We believe the way to be America's best grocer is to provide great value by consistently lowering prices and offering more choices. 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," said Rodney McMullen, chairman and CEO of Kroger. "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."

This strategy is not new to Kroger, the company said, noting that the retailer has invested to lower prices consistently since 2003, resulting in $5 billion in customer savings and providing more affordable products to families across America.

[Read more: Albertsons named Drug Store News Pharmacy Innovator of the Year 2022]

Kroger offered an analysis that puts this significant investment into clearer context and includes additional details. Specifically, it demonstrates Kroger:

• Consistently lowered prices and improved the customer experience during previous mergers: Kroger 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. Additionally, Kroger 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.
• Reduced profits to ensure groceries remained affordable for families across America: Kroger's ongoing work to lower prices in the last 20 years reduced its gross margin by 5%. Meanwhile, Amazon, Ahold Delhaize, Walmart and Dollar General have increased gross margins by 22%, 4%, 1% and 2%, respectively, during the same time period, Kroger said.
• Made clear, consistent commitments to lower prices and improve the customer experience post-merger: Kroger will invest $500 million to lower prices following the merger with Albertsons starting day one following the transaction close. Kroger also will invest $1.3 billion to improve Albertsons' stores following the merger, all to better serve customers.

[Related: Kroger reports Q3 results]

• Will become more competitive and able to invest even more to support customers and more than 700,000 associates by combining with Albertsons. Kroger's merger with Albertsons will allow it to attract and retain more customers by lowering prices, creating a more seamless and personalized experience and expanding its selection of fresh, affordable food. By doing so, Kroger expects to grow revenues and drive additional investments in pricing and store improvements as well as wages and benefits.