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Fred Meyer/Safeway merger could affect Alaska consumers

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Safeway stores
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Produce at a Fairbanks Safeway store is shipped through the Port of Anchorage, like most foodstuffs consumed in Alaska. A vulnerable supply chain has consumer advocates worried a buy-out of Albertsons stores, which owns Safeway, by Kroger, which owns Fred Meyer, would weaken food security in the state.

More than a month after announcing that Kroger and Albertsons grocery stores will merge, the corporations have no explanation for how it will affect Fred Meyer and Safeway customers in Alaska.

The corporations announced the merger agreement October 14, and produced a joint website: https://www.krogeralbertsons.com/ and brief video statements from the CEOs.

“The combination of Kroger and the Albertson companies is a tremendous opportunity to bring together two highly complementary organizations,” said Rodney McMullen, Kroger Chairman and CEO, who promised efficiencies and a “world-class shopping experience.”

But Alaskans are worried about jobs and the downsides of such a merger. Kroger runs Alaska’s Fred Meyer stores, and Albertsons runs Safeway and Carr’s stores.

“And what that means when they say they're getting more efficient, which is how they sort of sell this, is they mean they're firing people. It means you had two grocery stores and now you have one. So, you have half as many employees, but all the same customers,” said Graham Downey, Consumer Advocate for the Alaska Public Interest Research Group.

The two groceries are among Alaska’s largest employers. Currently, Safeway stores are unionized, and Fred Meyer stores are not. The United Food & Commercial Workers Union Local 1496 has been negotiating with Fred Meyer, but has not commented on that or the merger.

Nationally, Kroger is the nation’s second-largest supermarket chain, and Albertsons is the fourth-largest grocer.

Vivek Sankaran, the current CEO of Albertsons, says the new company will upgrade stores and expand the brands they sell.

“Together we'll be able to create a premier omnichannel retailer and provide even more personalized service to customers across the country.”

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In a screen capture from announcement video, Rodney McMullen, Kroger Chairman and CEO is welcomed to an Albertsons grocery store by Vivek Sankaran, the current CEO of Albertsons companies.

If the deal is allowed, Kroger would buy Albertsons for $24.6 billion, and the new company would be as big as Walmart and Amazon, with nearly 5,000 stores serving 85 million households across the US.

It would also have a huge database of national consumer behavior data, which some analysts are calling the real prize, because it would generate billions in revenue in new retail companies. Just one grocer would run the companies’ many regional chains, such as Harris Teeter, Ralphs, QFC, King Soopers, Vons, Safeway, Jewel Osco, and Acme.

It would also have a huge database of national consumer behavior data, which some analysts are calling the real prize, because it would generate billions in revenue in new retail companies.

But in Alaska, where the supply chain is vulnerable, consumers care more about food security.

There are some independent grocers in Alaska, niche stores like the Roaming Root in Fairbanks, the IGA store in Delta and the member-owned cooperative in Fairbanks. There are wholesalers like Costco, and there are also other chains, like Walmart with 10 stores -- but not all sell groceries, the Alaska Commercial Company with 33 stores serving rural communities, and the emerging Three Bears chain with 11 stores.

But the 12 large Fred Meyers and 35 Carrs Safeways stores are the major competitors in Kenai-Soldotna, Wasilla-Palmer, Juneau, Anchorage and Fairbanks. They serve more Alaskans in those population centers than any other retailers.

In many Alaska towns, like Fairbanks, the Safeway and Fred Meyer stores are across the street from each other. Downey says if the merger goes through, one of those stores would close.

“And then you have market power -- the power to set the prices. You don't have the competitor across the street making sure you don't have a crazy price on milk or cucumbers. You can pretty much name your price and people are gonna have to pay it,” Downey said.

Repeated calls and emails to Kroger and Albertsons corporate offices over the last month were not returned.

The merger will take some time and is planned for early 2024. But first, it has to pass anti-trust standards. Attorneys general in Washington state, Illinois, California and the District of Columbia have now filed suits to prevent various aspects of the merger, including the fear of an illegal monopoly that will hurt consumers in the long run.

Two Alaska legislators have written a letter to the Federal Trade Commission, the FTC, explaining Alaska’s unique shipping situation and asking them to investigate the potential price hikes in the Kroger/Albertsons merger. AKPIRG’s Graham Downey says says the FTC is starting to look at market power.

“The federal regulators, are starting to look at market power. Prices might be less in the short term, but in the long term, what kind of economy are we creating here? Are we creating a diversified economy of lots of local businesses that's keeping money circulating within our state, or are we making a tiny number of shareholders, very rich?”

Downey says the Alaska Public Interest Research Group is asking consumers to sign a letter to Alaska’s congressional delegation telling them to oppose the merger.

On the merger website, the corporations say that until the transaction closes, Kroger and Albertsons will remain separate, independent companies.

Robyne began her career in public media news at KUAC, coiling cables in the TV studio and loading reel-to-reel tape machines for the radio station.