Scott Moses, head of grocery, pharmacy and restaurants for Solomon Partners said competition in the Southwest Colorado grocery market won’t be an issue if the Albertsons-Kroger merger goes through.
Solomon Partners was hired by Albertsons to conduct research on the merger. Moses presented a pro-merger stance to Colorado media members on Thursday morning via Zoom.
In February, the merger was blocked by the U.S. Federal Trade Commission, alleging the merger would lead to higher prices, store closures and job losses.
“In American grocery today, you simply do not have the ability to raise prices, without it being crystal clear to your customers and then losing customers to guys like Walmart, Target and Costco,” Moses said when asked about the merger’s impact on grocery prices in Southwest Colorado.
Moses admitted that every market was different but there are still plenty of options that create enough competition, especially Walmart.
But as for many of the other presented options like Target and Costco, they do not exist in Southwest Colorado. The closest Target is in Farmington, an hour drive. And the closest Costco location is in Albuquerque. However, Sam’s Club, a Costco equivalent, is also in Farmington.
During his presentation, he pointed out that customers also use services like Amazon to purchase their groceries and have them shipped.
In Durango, Walmart, Albertsons and two City Market locations compete as big-name grocery retailers. Cortez has a Safeway, City Market and a Walmart and Pagosa Springs has all three as well.
The merger could create a situation in which one company could take up a large portion of the grocery market, which was a concern for Colorado Attorney General Phil Weiser, who filed a lawsuit against the merger in February.
“Coloradans are concerned about undue consolidation and its harmful impacts on consumers, workers and suppliers,” Weiser said in the lawsuit. “After 19 town halls across the state, I am convinced that Coloradans think this merger between the two supermarket chains would lead to stores closing, higher prices, fewer jobs, worse customer service and less resilient supply chains.”
Fort Lewis College Associate Professor of Economics Nate Peach shared similar concerns. He told The Durango Herald on Feb. 28 the merger could mean the loss local grocery jobs because it is likely the retailer would consolidate and close stores.
However, in the Albertsons-Kroger merger divestiture plan, the companies have vowed not to close any of its stores as a result of the merger – something Moses brought to attendees’ attention on Thursday.
Moses said if Kroger were to increase its prices, customers would find other ways to shop for groceries.
“Anyone (grocery retailer) who's tried to do that has ended up bankrupt, because you will have a precipitous traffic decline, a precipitous business decline, and everyone who runs grocery businesses knows you simply can't do that,” he said.
Through his research, he has found that Walmart owns three times more of the U.S. market than Kroger and five times more than Albertsons. In contrast, Albertsons and Kroger have lost 14% of the United States’ market share over the last 10 years.
He contends the merger would allow the supermarket retailer to better compete with Walmart, a major competitor in Southwest Colorado. He says Walmart’s competition, along with online grocery retailers, are enough to keep Kroger honest about its prices.
Kroger is expecting to close on the merger by Aug. 17, according to a news release from the company.
tbrown@durangoherald.com
