What could the Kroger Albertsons merger mean for Idaho?

BOISE, Idaho (CBS2) — If the merger is approved between Kroger and our hometown Albertsons, what will it mean for Boise and for Idaho?

If federal regulators approve the $24.6 billion deal, it could mean layoffs at both stores and the Albertsons corporate office.

Post merger, Kroger has already said it would shed up to 375 stores to a spin off company. Those stores would be in areas where both companies have a strong overlapping presence - like in the Treasure Valley.

"We're talking probably tens of thousands of workers that may lose their job," said Tom Geiger, a spokesperson for the UFCW 3000, a union that represents workers at both Albertsons and Kroger stores, including hundreds in northern Idaho.

He points to when Albertsons brought Safeway as cause for concern.

"There were many stores that ended up being purchased by Haggen that ended up folding. Haggen filed for bankruptcy, and people lost their jobs, stores closed in different communities throughout the West," said Geiger. "So there's a lot of reason to be cautious when a big company tells you it's going to be good for your community, and often it's the opposite."

Steven Peterson, an associate clinical professor of economics at the University of Idaho agrees there certainly could be layoffs.

"In some specific locations," Peterson said. "If this merger turns out to increase the productivity of the grocery business, and the food products business in the U.S., that's going to lead to a net increase in jobs across all sectors in the U.S."

Those layoffs could extend to the corporate offices of Albertsons.

He did a quick calculation of the possible economic impact if there were corporate cuts.

"For every one hundred corporate jobs [lost], that would lead to a reduction in gross state product of about $22 million," Peterson said.

As for shoppers, Kroger promises to reinvest about $500 million into price reductions.

Peterson sees the deal as one that would ultimately benefit customers. He says larger stores with more efficient operations usually lower prices for consumers.

“When you reduce the number of sellers, economic theory tells us that that causes upward pressure on prices through a reduction in competition. On the other hand, there’s economies of scale and scope in a very massive way with a whole array of production processes that can actually lead to overwhelm that and lead to substantial cost savings to the consumer, and from my understanding, that’s usually what wins," Peterson said. "The Walmart Effect reportedly in the 90s lowered the U.S. inflation rate at least for a while - at least one percent per year, and so that was through the supply chain efficiencies that Walmart brought."

Geiger doesn’t agree.

"In the last 3 years, we've seen significant inflation. The food inflation has been more severe than almost anything," Geiger said. "These grocery store companies, Kroger in particular, have pocketed extra billions in profits over and above the billions they were making before the pandemic... I don't think there's any real track record for these companies to show the good will and to share their wealth. I think they're trying to make as much money as they can as fast as they can."

Geiger's organization pledges to fight the merger.

"We're already contacting attorneys, we're contacting regulators, we're contacting state officials, and federal officials. Several U.S. senators have already spoken out against this. So we'll just keep that up, and you know, do the research and be connecting our members around the region as well to reassure them that we will be fighting this," Geiger said.

Now we wait to see if the merger will be approved by federal regulators. If it is, Kroger says it expects the deal could close in early 2024.

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