By Riad Beladi, International Supermarket News
In the competitive landscape of U.S. grocery retail, the potential merger between Kroger and Albertsons could create a powerhouse with 5,000 stores, surpassing Walmart in sheer number of locations. Despite this, their combined annual turnover would still fall short of Walmart’s massive revenue. Together, Kroger and Albertsons are projected to generate approximately $225 billion in annual revenue—less than half of Walmart’s $611 billion.
A National Giant in Terms of Stores
Kroger, the largest traditional supermarket chain in the United States, operates over 2,700 stores across the country under various banners, including Ralphs, Fred Meyer, and Harris Teeter. Albertsons, another prominent name in U.S. groceries, adds more than 2,300 stores with well-known brands like Safeway, Vons, and Jewel-Osco. If the merger is approved, this combined entity would form a grocery behemoth, giving it a substantial national presence and control over roughly 14% of the U.S. grocery market.
This increased footprint would significantly outpace Walmart’s 4,700 U.S. stores, positioning the new Kroger-Albertsons group as the largest supermarket chain by store count. The benefits of such scale would include greater economies of scale, improved operational efficiency, and more substantial bargaining power with suppliers.
Turnover Still Trails Behind Walmart
Despite having more stores, Kroger and Albertsons will continue to lag behind Walmart in terms of revenue. Walmart’s broad product range, including general merchandise and groceries, allows it to dominate the U.S. retail sector with a staggering $611 billion in annual revenue, far outstripping the projected combined revenue of $225 billion for Kroger and Albertsons. Walmart’s extensive non-grocery offerings contribute significantly to its revenue, providing it with a wider competitive edge beyond just groceries.
Walmart also controls nearly 25% of the grocery market, while the combined Kroger-Albertsons entity would hold around 14%. This difference in market share highlights the challenge of competing with Walmart’s lower-cost, high-volume model, which draws millions of U.S. customers.
The Road Ahead
The proposed merger offers advantages such as logistical efficiencies, better supply chain management, and a stronger e-commerce strategy. However, it also presents potential obstacles, particularly regarding regulatory scrutiny. The Federal Trade Commission (FTC) will closely evaluate the deal to determine if it creates a monopoly in certain regions, potentially resulting in store closures to avoid excessive market concentration.
Furthermore, while the merger might give Kroger and Albertsons the combined strength to negotiate lower prices from suppliers, questions remain about how it will impact consumers, particularly in regions where both companies operate.
A New Landscape for U.S. Grocery Retail
The Kroger-Albertsons merger would reshape the U.S. grocery industry, creating a dominant player in terms of store count, but still trailing Walmart in turnover and market share. As the regulatory process unfolds, industry insiders will be watching closely to see if this merger can deliver on its promises of better prices and improved shopping experiences for U.S. consumers.
While the potential scale of the merger is significant, Walmart’s unmatched revenue and market dominance ensure that it will remain the top player in the U.S. retail sector for the foreseeable future.