The U.S. Wants to Stop the Kroger-Albertsons Merger. It’s Not the First Supermarket Under Attack.
When Barney Kroger opened his first store in Cincinnati in 1883, people needed to make multiple stops to complete their grocery list—butcher, baker, cheesemonger. He put them all in one place, a super market.
Today, Kroger is America’s largest supermarket chain. And its proposed $24.6 billion takeover of No. 2 Albertsons, forming a 4,000-store, 48-state giant, would stifle competition and hurt both consumers and workers, the Justice Department argues in its lawsuit to block the merger.
Kroger says it’s a grocery small fry just trying to compete with the big boys.
That both sides have a point is a testament to the changing nature of America’s shopping habits. The once-dominant supermarket, that ubiquitous downtown presence that filled a family’s entire food needs, is now just one of numerous shopping options.
The beefed-up new Kroger would account for 13% of U.S. grocery bills, behind the 22% of market leader Walmart, a big-box store that sells a lot more than just food. Amazon, which doesn’t even rely on bricks-and-mortar stores, is the No. 2 food-seller. There are also drug, dollar and convenience stores to compete with.
A Kroger-Albertsons merger would be the latest and largest in an industry consolidation that has swallowed up so many of the nation’s beloved regional stores. Like the department store and the mall, the supermarket is becoming a niche player in America’s ever-changing retail landscape.
Barney Kroger played a key role by slowly converting his Great Western Tea Co.—for “persons hard to suit in teas and coffees”—into a one-stop store that included a bakery and butcher. He added private-label goods, including his mother’s homemade sauerkraut, and soon operated an expanding chain of Kroger Grocery and Bakery stores.
In 1929, Kroger peaked with 5,575 stores across Kentucky, Missouri and Indiana—more locations than the new combined Kroger-Albertsons would have. But, back then, Kroger wasn’t even the big fish of grocery. That was A&P.
“The Great Atlantic & Pacific Tea Co. has built up the greatest cash business in the world,” Barron’s wrote on Feb. 20, 1922, reporting that A&P’s $200 million in sales topped those of any other retailer—not just food-sellers—including Sears, Roebuck and Woolworth.
“In any sizable town or city east of the Rockies,” Barron’s wrote, “the A&P store may be found.”
A&P would remain America’s top retailer into the 1960s, as supermarkets covered the country. Safeway dominated west of the Rockies, but many regional chains and even single stores, like Kilroy’s Wonder Market of Glen Rock, N.J., thrived.
King Kullen of Queens, N.Y., founded in 1930 by a former Kroger employee, is often cited as the first true supermarket by providing five key features: separate departments, self-service, discount pricing, chain marketing; and volume dealing. Billed as “the world’s greatest price wrecker,” King Kullen fit the tight family budgets of the Great Depression.
Joe Albertson got into the grocery game late, in 1939. But already 32 and a veteran of more than a decade at Safeway, where he had worked up to regional supervisor, Albertson knew exactly what he wanted—“Idaho’s largest and finest food store,” as he billed it.
The first Albertsons, in Boise, was joined by two more within a year, and the name soon spread throughout the Northwest. Then it got acquisitive, buying 14 Greater All-American Markets in Southern California in 1964, bringing its store count to 116. By 1967, Albertsons was up to “196 stores, with another 18 planned to be opened before next April,” reported the The Wall Street Journal.
But, even as the supermarket was extending its dominance across America, a new competitor was arising. The first Walmart Discount City opened in Rogers, Ark., in 1962.
Walmart “is the most consistent growth company around,” John Tilson of the Pasadena Growth Fund told the Journal in 1988, when the retailer was pushing for growth in groceries. “I have a lot of confidence that they’ll be able to succeed in it,” Tilson said.
By 1990, Walmart was the country’s most profitable retailer, and big-box stores like it and Costco had become the one-stop shop for a new age, stealing customers from retailers of everything from clothes to auto parts, sporting goods and much more.
Amazon, founded as an online bookseller in 1994, was just “taking small steps toward grocery-delivery service,” the Journal wrote in 2007. Small steps became a leap in 2017 with Amazon’s purchase of Whole Foods, and the Covid pandemic pushed more people into online shopping. It now sells as much food as Kroger and Albertsons combined.
Kroger and Albertsons are dinosaurs, remnants of an earlier age, when mom drove down to the supermarket and fit her whole family’s culinary needs in the back of the station wagon. Ralphs, Dillons, Harris Teeter, Vons, Safeway and even A&P have all been swallowed up. Kroger and Albertsons are among the last ones standing.
“Supermarkets are losing this food fight,” Kroger lawyer Matthew Wolf said in his opening statement at the antitrust trial. In the larger scheme of things, at least, he’s right.