The FTC is expected to soon weigh in on the Kroger/Albertsons merger. The $24.6 billion deal will create a grocery chain with over $200 billion in annual sales. With nearly 5000 stores, 70,000 employees and 15% national market share, the roll-up will include dozens of familiar banners, including King Soopers, Fred Meyer, Harris Teeter, Vons, Vitacost, Randall’s, Haggen, Shaw’s, Jewel-Osco and Safeway. The combination will be second only to Walmart/Sam’s Club in grocery volume and enable just 4 chains to control 60% of grocery sales in the U.S. After years of price inflation enabling record profits and stock buybacks, there is significant pushback to the merger.
In an attempt to satisfy regulators, Kroger and Albertsons will spin off over 400 stores to C&S, the industry’s largest privately owned wholesaler. C&S also operates 160 grocery stores on the east coast, including Piggly Wiggly and Grand Union. The divestments will mostly occur on the west coast, including Ralph’s and QFC, where Kroger
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We spoke with two grocery workers in Los Angeles about the merger and the spin off. Jessica Crowley is a retail pharmacist at Pavilions (Albertsons) and Rachel Fournier is a cashier at Ralph’s (Kroger).
Errol Schweizer: What are your general thoughts about the potential Kroger-Albertsons merger?
Rachel Fournier: The idea of Kroger and Albertsons, which are already humongous companies, merging to become one gigantic corporation that we would have to negotiate with is kind of scary for us. I know that from participating in the last contract and seeing how that went. I just imagine that if we’re just staring at Kroger across the negotiating table, they’re not really going to have any incentive to give us anything that we ask for. They’ll be able to stonewall us. We wouldn’t have gotten the kind of raises that we did get.
Jessica Crowley: I have major concerns from the pharmacy perspective and a patient access point. So I’m sure you’ve probably been aware of everything that’s been happening in retail pharmacies across the country. There have been closures in every single state. I’ve had three pharmacies close near my store in Los Angeles in the last year, and I expect that to continue. So with the potential merger, I’m majorly concerned that there will be less competition. I will just give a couple examples just from the pharmacy perspective.
Ralph’s and Albertsons use two different wholesalers to buy their medications from. There have been major back orders and medications that are unavailable, but the benefit of having different pharmacies use different wholesalers is if I don’t have the medication at my store, there may be a Ralph’s nearby where a patient can go and get it from some other wholesaler. So when you merge two companies, that access is going to be reduced. The other thing that comes to mind is in 2023, Kroger decided not to contract with a pharmacy benefits manager called Express Scripts
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ES: Recent research shows that the merger could put downward pressure on wages and benefits and reduce worker bargaining power. Could you just give us an idea of what you were bargaining for in the last contract?
RF: Some of the things that we were focused on were, one, obviously, our wages had fallen way behind. We were trying to reduce the gap between the two-tier wage system so that people would have a livable wage. And we were concerned coming out of COVID with safety procedures and having a voice in our stores to address safety. And during the contract negotiations, it was surprisingly difficult to even get the companies to agree to just have a couple of employees have a safety meeting every month. And then they dug their heels in even worse on the wages. They did not want to give us near what we were asking for.
If this merger goes through, they are just going to give us these take it or leave it offers. You’re going to have more strikes that last a longer time because the company doesn’t have a competitor that they’re worried about. It’s not only going to affect union workers, but when union workers can’t win those kind of economic increases it affects other people in the industry, too, because our competitors who are non-unionized, they have to also step up and increase the minimums that they’re giving to their employees. It’s going to affect the entire economy.
Jessica Crowley, pharmacist at Pavilions, “The bottom line is that the companies care about what’s … [+]
ES: What is your experience negotiating around wages and working conditions for pharmacy workers with Kroger and Albertsons?
JC: Our negotiations actually started with grocery and continued on for six months of brutal back and forth, really no give at all. I mean, for the majority of the negotiations, they were unwilling to move even pennies. I think they were offering us like $0.10 raises when the majority of Americans got their COVID 19 vaccines in a pharmacy. And so it really felt like an insult to not recognize how essential we are and how much we did for the entire country to keep people safe. But ultimately, we did get some safety language. And we were able to get more reasonable wage increases, but it really came from the pharmacies coming together, something you don’t see very often.
And we’re seeing it now with CVS and Walgreens pharmacists. They’re doing walkouts across the country. It’s really the first time in history that that I’m aware of where pharmacists have come together on such a great scale, because the working conditions in pharmacies are just getting worse and worse over time. They’re asking for us to do more, do it with less help. The bottom line is that the companies care about what’s going to make them more profitable rather than what’s actually best for the patients and for their workers.
California grocery workers at a public listening session about the Kroger-Albertsons merger in … [+]
ES: What do you think about the spinoff plan, that Kroger and Albertsons will be divesting stores to C&S Wholesale, including 66 Ralph’s stores?
RF: Well, with Haggen in 2015, in order to satisfy the regulators (during the Safeway merger), Albertsons promised to spin off a number of stores to a potential competitor. And within a few months they were closing stores, going bankrupt. Haggen wasn’t a real competitor. They didn’t last. And people ended up losing their jobs, their pensions, their peace of mind. They (C&S) don’t have a lot of experience running grocery stores. They have almost nothing out on the West Coast where I work. I just don’t see how 66 stores that are basically new to the industry are really going to compete.
JC: From the pharmacy perspective, the idea that a wholesaler would come into the pharmacy business is just absurd. It is so complex. It’s changing every day and there are so many systematic issues within the existing pharmacy structures. There is no way that their pharmacies are going to last. And that’s just going to result in pharmacy closures. A lot of rural areas, especially in California, their local pharmacy is within the grocery store. So if that doesn’t last and if they don’t have access to it, they have no alternatives to get their medications.
ES: These divestiture plans reminds me of Charlie Brown and Lucy with the football. What can be done here? Because this merger has not been finalized. Multiple state attorneys general, legislators, independent grocers, unions, even produce suppliers have spoken out against it.
JC: You’ll be surprised at how many people have gone through similar mergers before and they’ll tell you how terrible it was for them at the time.
RF: We do have a website called No Grocery Merger, and that has some activities that you can do to speak out against the merger. You could contact your elected officials, your state attorneys general. The website has a form letter that you can sign on to. That’s directed to Lina Khan, who is the head of the FTC, and the regulators under her to deny the merger.
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