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Amazon and the Kroger-Albertsons merger

amazon fresh pickup
Amazon launched AmazonFresh in 2007, and has been experimenting with it ever since, with service areas, fees, and features like this AmazonFresh pickup location in Seattle. (Photo by Pamela Riemenschneider)

Writing in Retail Wire, George Anderson discusses the proposed Kroger-Albertsons merger. If it is approved by the Federal Trade Commission (FTC), the new megachain would be required to divest at least 250-300 stores to satisfy antitrust provisions.

Anderson asks whether Amazon BB #:283186 should or will acquire these stores to add to its own Whole Foods/Amazon Fresh empire.

richard smoley produce blueprints

He apparently believes Amazon’s claims that it is committed to retail grocery, citing a recent comment by Amazon CEO Andy Jassy: “If you really want to have significant market segment share in perishables,” which Amazon ostensibly does, “you typically need physical stores.”

As many commentators on Anderson’s article have pointed out, Amazon’s acquisition of divested Kroger-Albertsons BB #:193326 stores isn’t too likely. David Fischer writes: “Kroger BB #:100073 stated at the outset that they needed this merger to compete with Amazon, and now they want to sell them stores? That undermines their case for a merger.”

But the real reason that Amazon will not purchase these stores is that it does not understand retail grocery, as its recent stumblings demonstrate. Amazon Go has proved to be a fiasco. Amazon Go store closures reflect a good idea badly executed (

The company has halted openings of new Amazon Fresh stores, and Whole Foods has announced restructuring and major job cuts. Whole Foods plans job cuts as it reorganizes regional, global structures – Produce Blue Book

These look very much like a sick man in bed tossing and turning to find a painless position.

Whatever Mr. Jassy tells the public, it seems likely that Amazon is groping for ways to get out of this sector. If any Amazon Fresh stores survive in the long run, it will be only because they serve as useful warehouses for online delivery and might as well get a little retail business on the side.

As for Whole Foods, my wife and I agree that every visit to their Wheaton, IL, store is increasingly disappointing. (We go principally for the fishmonger: it is hard to get good fish and seafood out here on the Illinois prairie.) Amazon has constantly eroded the qualities that made Whole Foods successful by reducing variety, cutting staff, and having its own online delivery people jostling with customers, who are not paying Whole Foods prices to be subjected to this treatment.

I suspect that the great ones of Amazon—who are, after all, good businessmen and -women even if they are poor supermarket managers—are sitting out the outcome of the Kroger-Albertsons merger before they find a buyer for Whole Foods, ideally some company that knows what it is doing in this area.

Then there is the merger itself. Most analysts believe that it will go through in some form or another. Maybe, but federal regulators may not be as amenable to such moves as they once were.

FTC chair Lina Khan has criticized a similar merger between Safeway and Albertson’s in 2015.

The merged company divested itself of 146 stores, selling them to a Haggen, a small chain based in the Northwest. But Haggen couldn’t absorb the stores it acquired. It went bankrupt, and the new and mighty Albertson’s—outrageously—bought back some of the stores it had gotten rid of, at fire sale prices.

Khan is asking hard questions about the merger. However it turns out, the federal decision about it will say a great deal about government antitrust policies in the future.

In the meantime, the CEOs of Kroger and Albertsons have published a joint letter in the Cincinnati Enquirer attempting to dispel misconceptions about the merger. You are, of course, entirely free to believe as much of it as you like.


Richard Smoley, contributing editor for Blue Book Services, Inc., has more than 40 years of experience in magazine writing and editing, and is the former managing editor of California Farmer magazine. A graduate of Harvard and Oxford universities, he has published 12 books.