The Nevada Independent

Your state. Your news. Your voice.

The Nevada Independent

Nevadans fear food price hikes as 2 grocery store giants look to merge

Nevada AG considers opposing deal that would combine Kroger and Albertsons as chains try to compete with Walmart
Eric Neugeboren
Eric Neugeboren
Economy
SHARE

Standing in a small room in Las Vegas earlier this month, Abraham Camejo had a message for Nevada’s attorney general: A merger between Kroger and Albertsons could make it harder to put food on his family’s table.

Camejo, a construction safety manager, is a father of six. To feed his family, he and his wife often buy four gallons of milk each week and dozens of eggs. He’s worried that if Kroger and Albertsons merge, his family will have to make tough decisions on which foods they can afford.

“My wife is going to be looking at the prices, and am I going to be able to say, ‘Do I buy milk or can I afford strawberries? Can I afford grapes, which my little girls love?’” Camejo said. “My family's from Cuba. I know how it is to live without food. I know how it is to have to fight for it  … And that is the greatest concern that I have with this merger is those types of questions.”

Kroger and Albertsons, two leading grocery store chains in Nevada, announced plans for a $24.6 billion merger last year. Although the companies say they will not close any stores as a result, the Nevada Office of the Attorney General has opened an investigation into the consumer effects and legality of the potential deal, and Attorney General Aaron Ford has held meetings across Southern Nevada to gauge residents’ thoughts.

Nevada is one of 17 states that have publicly announced they are investigating or opposing the merger, in addition to the Federal Trade Commission (FTC). Kroger and Albertsons say the deal is a key effort to stave off industry behemoth Walmart. But it also has prompted concern from consumers and workers, who argue the merger would lead to less competition and possible layoffs, especially in places where Kroger and Albertsons have stores near one another.

There are more than 90 Kroger and Albertsons stores or affiliates in Nevada, mostly in the Las Vegas area. Kroger also owns Smith’s, and Albertsons oversees Safeway and Vons stores. There are dozens of instances where Kroger and Albertsons branches are near each other.

The companies plan to make the merger official in the first few months of 2024. The attorney general’s office and the FTC could not comment on the status of their investigations, but Ford said that any decision to support or oppose the deal would have to come “well before they decide to consummate the deal.”

The deal’s first specifics were released earlier this month. Under the agreement, the merged companies would retain ownership of most of the nearly 5,000 stores in their combined portfolio but would sell 413 stores — including 15 in Nevada — to the third party C&S Grocers, an effort to maintain competition and fend off state and federal regulators. C&S is primarily a grocery supplier for grocery stores rather than an operator, but they do own brands including Piggly Wiggly.

However, beyond that claim, minimal details are known, leading to concern that — like other mergers — the situation could lead to higher prices for consumers.

“We've seen instances before when mergers happen and competition is eliminated, firms have more pricing power. They don't have to compete with each other on prices. And so I think historically those concerns have been very valid,” Lina Khan, the chair of the Federal Trade Commission, told Nevadans at a listening session in Las Vegas earlier this month.

The grocery industry is dominated nationwide by Walmart, which made up a quarter of the market share last year. Because Walmart is so powerful in the grocery industry, food suppliers have no option but to cooperate, said Chris Jones, the top lobbyist for the National Grocers Association, which represents family-owned grocers.

“A company that represents that much of your sales is an indispensable customer, which means that they have far more leverage over you than you do over them,” Jones said in an interview with The Nevada Independent. “They have to kind of bend to the will of Walmart.”

But some consumers and industry officials say that rather than resolving the problems presented by Walmart, the merger would only further limit competition and give food suppliers less leverage over Kroger and Albertsons.

“When you have more entities competing for the dollar, the better service those consumers are going to get, and the lower the price is going to be for a product,” Jones said.

People shop at a Smith’s location in Henderson on Friday, September 15, 2023. (Daniel Clark/The Nevada Independent)

Public concerns

At the listening sessions hosted by the attorney general’s office, Nevadans said they were concerned about the merger’s implications.

Luc Mayer, a Henderson resident who attended a Boulder City meeting, has bought the same brand of toothpaste from grocery stores for decades. In the past few years, he has seen the price increase from a dollar to $2.50.

“Five bucks in my life is not a big deal. For a lot of people it is,” Mayer said. “Competition is there for a reason: to hold down prices. I don't want to be like Boulder City where you have one supermarket. These are big companies, big footprints, and a lot of people don't have the money to pay an extra 10, 15 percent at the market.”

Mark Brandano, another Las Vegas resident, recalled the failed acquisition efforts from the Haggen grocery store chain in 2015. The company bought seven Albertsons and Vons stores in Nevada but filed for bankruptcy months later. He worries that if the stores sold to C&S Grocers suffer a similar fate, there would be less competition.

The companies argue the merger will instead lead to lower prices and more food selections.

People shop at an Albertsons location in Henderson on Friday, September 15, 2023. (Daniel Clark/The Nevada Independent)

The proposed merger has also led to worries from workers and unions about layoffs and the termination of union contracts. The companies maintain that there would be no store closures as a result of the merger and that all union jobs would be secured. However, without those stipulations enshrined in writing, workers are skeptical. The union representing food and commercial workers in Southern Nevada has officially opposed the merger.

Diane Irwin, who has worked for Albertsons for 39 years, said she has several lingering questions.

“Who's to say that … they may lay off? Are they going to go by seniority? And are they going to pick and choose what store we want to work for?” Irwin asked. “The district managers and store director, they're nonunion. Are they going to have to look for a job?”

Ford, the Nevada attorney general, and Khan, the FTC chair, said they could not answer most of the questions from consumers because their investigations are ongoing.

Food deserts

The listening sessions are a way for the attorney general’s office to gather more information on the consumer effects of the merger, Ford said. He added he wants to look beyond documents and hear Nevadans’ thoughts about the deal.

Ford said “one of the biggest issues” he was concerned with regarding the merger is the possibility of even more “food deserts,” areas where people have minimal access to grocery stores.

In Clark County, which is where most of the Kroger and Albertsons stores are located, 12 percent of residents face food insecurity, defined as "a lack of consistent access to enough food for every person in a household to live an active, healthy life." A lack of access to grocery stores is a contributing factor to food insecurity, according to Nevada’s Office of Food Security.

Residents and officials say they are particularly concerned about store closures in cases when a Kroger and Albertsons branch are close to each other, despite the two companies pledging that no stores will close as a result of the merger.

In Nevada, there are 31 Kroger stores that are within two miles of an Albertsons or Vons branch, according to a Nevada Independent analysis. Some Kroger stores are within 2 miles of multiple Albertsons or Vons locations, according to a Nevada Independent analysis.

One of those Kroger stores is located in a ZIP code where 21 percent of residents are facing food insecurity, the fourth-highest rate in Southern Nevada, according to data from Three Square, an organization combating food insecurity.

The companies have not publicly stated which branches will be sold to C&S Grocers, which would provide more insight into what areas may be the most impacted. The number of stores sold to C&S could increase to up to 650 branches. 

Jones, from the National Grocers Association, said no matter how many stores are sold to C&S, concerns remain.

“This is going to be a massive company that's going to be able to claim buyer power over suppliers,” Jones said.

This story was updated at 10:20 a.m. on 9/19/23 to correct the number of Kroger locations within two miles of an Albertsons or Vons branch. The story’s map was also updated to include all Kroger locations in Las Vegas.

SHARE

Featured Videos

7455 Arroyo Crossing Pkwy Suite 220 Las Vegas, NV 89113
© 2024 THE NEVADA INDEPENDENT
Privacy PolicyRSSContactJobsSupport our Work
The Nevada Independent is a project of: Nevada News Bureau, Inc. | Federal Tax ID 27-3192716