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Albertsons Lays Off Corporate Staff After Kroger Merger Falls Through

By R BELADI, International Supermarket News

Boise, Idaho-based Albertsons Companies has confirmed layoffs across its corporate and division support workforce following the collapse of its proposed merger with Cincinnati, Ohio-based Kroger. While the merger aimed to create a retail giant in the grocery industry, regulatory hurdles ultimately derailed the deal.

Strategic Realignment Amid Layoffs

Despite reporting a 2% increase in identical store sales and a remarkable 23% growth in digital sales for Q3 2024, Albertsons stated that adapting to a “rapidly changing market” requires continuous evaluation and recalibration of its operations.

“Our strategy includes finding new sources of productivity to enable us to invest in growth,” the company said in a statement. After years of streamlining efforts, Albertsons turned its focus to administrative expenses, resulting in a decision to reduce corporate and division staff.

While Albertsons declined to disclose the exact number of employees affected, it emphasised that store-level staff, who directly serve customers, remain unaffected. The company also assured that severance packages, career support services, and extended benefits would be provided to impacted employees.

“This decision was not made lightly, and we appreciate the contributions of impacted associates,” Albertsons added.

Albertsons-Kroger Merger: A Missed Opportunity

The now-failed $24.6 billion merger between Albertsons and Kroger aimed to create a powerhouse in the U.S. grocery industry. Combined, the two companies would have operated nearly 5,000 stores and served millions of shoppers nationwide. However, the merger faced significant opposition from regulators and consumer advocacy groups, who raised concerns over reduced competition and potential market monopolisation.

The Federal Trade Commission (FTC) expressed scepticism about the companies’ proposed divestitures, arguing they would not adequately preserve competition in regions where the two retailers had significant overlap. Public opposition and fears of job losses further contributed to the merger’s downfall.

Financial Performance: Strength Amidst Challenges

Albertsons reported nearly USD 18.8 billion (EUR 18.3 billion) in net sales and revenue for the quarter ending 30 November 2024, a 1.2% increase compared to the same period in 2023. Meanwhile, Kroger also reported higher identical store sales, excluding fuel, but saw a dip in overall sales due to the sale of Kroger Specialty Pharmacy and declining fuel revenue.

Looking Ahead

The failure of the Albertsons-Kroger merger underscores the challenges of large-scale consolidation in the retail industry, particularly in navigating regulatory scrutiny and public sentiment. For Albertsons, the focus now shifts to enhancing productivity and sustaining growth in a competitive market, with a strong emphasis on its digital sales performance and operational efficiency.

Kroger, meanwhile, continues to prioritise steady growth and profitability, while navigating its own challenges in a dynamic retail landscape.

The grocery industry is at a crossroads, with companies increasingly focusing on digital transformation and personalised customer experiences to stay competitive. As Albertsons and Kroger regroup, their strategies in the coming months will set the tone for the future of U.S. grocery retail.