Grocery workers facing 'so much uncertainty' protest proposed Kroger-Albertsons merger
This story is part of a series about a proposed $25 billion merger of two of the nation's largest supermarket chains.
rocery workers have been speaking out against the proposed merger between grocery giants Albertsons and Kroger. Recently, unions representing workers launched a nationwide campaign to block the merger. For those who experienced previous buyouts, the announcement last fall reopened old wounds and raises new fears.
To underscore what’s at stake, the union representing nearly 27,000 grocery workers in Washington state held a press conference at Junction Plaza Park in West Seattle. Right now, shoppers have two grocery options, separated by a block.
“There’s a QFC right across the street,” said UCFW 3000 President Faye Guenther. “There’s a Safeway right down the street. One’s owned by Kroger, and one’s owned by Albertsons, and they compete against each other.”
Once the merger is complete, these former competitors will be under one company umbrella. That’s likely to raise concerns from regulators.
“The reason we chose this location is one of these places could be shut down,” Guenther said.
Guenther is referring to divestiture, a remedy often used to break up a monopoly. But when stores close, it’s more than just companies shuffling assets.
For workers like Naomi Oligario and Keenan Calhoun, the process creates an emotional upheaval.
“It brought me again to tears today because… it’s wrong,” Oligario said.
Calhoun nodded in agreement.
“It’s just like Naomi said, it’s just so much uncertainty,” he said.
Calhoun and Oligario have gone through grocery mergers before and remember the disruptions that followed. Oligario had been with Safeway for three decades when it was divested and spun off after Albertsons bought the company in 2015.
“We all had to reapply, we all had to look for jobs as soon as they closed,” Oligario recalled. “And not everybody got their job back.”
Those who were able to get their jobs back didn’t always receive the same compensation and benefits. Calhoun remembers what it was like when Kroger bought Fred Meyer during an earlier merger.
“During a merger they may say your seniority will carry over, but it doesn’t always carry over or not in the way you expect," he said. "It really is taking what so many people have worked so long to build up and just like throwing it in the trash.”
Albertsons and Kroger have a significant presence in Washington state, with more than 330 stores combined. Company officials say the merger is necessary for their long-term survival. They say they’re cooperating with regulators to address their concerns and expect the merger to be completed by 2024.
It’s not clear how many stores, or which locations will be divested. Company leaders told a Senate subcommittee they plan to create a third party tentatively called SpinCo for those stores. The companies are aware regulators, in this case the Federal Trade Commission, will closely scrutinize the proposed divestiture.
"The Federal Trade Commission’s job is to decide whether or not those divestitures are likely to succeed,” said Douglas Ross, who teaches antitrust law at the University of Washington.
Ross says the FTC will examine two things to make that determination —whether the companies are divesting enough stores in the right markets, and whether they’re divesting in a way that will produce robust competition and succeed. Regulators will also consider history.
“It’s clearly the case what happened with the Safeway-Albertsons merger is going to haunt this merger,” Ross said.
The Albertson-Safeway merger in 2015 required the companies to divest some stores. Regional chain Haggen bought 146 of them to expand its footprint along the West Coast. But the transition was bumpy, prompting Haggen to sue alleging that Albertsons misled the company with muddled inventory data and price information.
Less than a year later, Haggen filed for bankruptcy. Albertsons bought back dozens of the same stores it sold. But many are no longer in operation.
“Neither the Federal Trade Commission nor the courts want to make any mistake twice, and have a spinoff happen here into a company that cannot succeed,” Ross said.
Officials at Albertsons and Kroger say this merger will be different. That doesn’t bring comfort to workers like Oligario. Where she works in Port Orchard there are four stores that could be affected. Oligario says these decisions not only affect their livelihoods, but their communities, too.
“The likelihood of them closing one or two is quite high, and everybody’s on pins and needles right now,” she said.
Update: After this story published, a Kroger spokesperson emailed KUOW, issuing statements regarding concerns raised by employees:
We will not close any stores, distribution centers or manufacturing facilities as a result of this merger, including stores that may need to be divested to obtain regulatory approval. No exceptions, no excuses. We are in the process of working with regulators to develop a thoughtful plan for store divestitures to ensure that any divested stores are sold to qualified operators with appropriate management experience, a sound business plan, strong balance sheet and the financial stability to continue to succeed and serve their communities.
The spokesperson added that the company will invest $1 billion to increase employee wages and benefits.