Groceries Could Be Getting Even More Expensive in RI

Groceries Could Be Getting Even More Expensive in RI

If you thought groceries were expensive, they may be getting a lot more costly — especially if you shop at Shaw’s and Star Market.

Shaw’s operates 150 stores throughout New England, and it is owned by Albertsons.

On Friday, Kroger Co. said it is buying rival Albertsons in a mega-deal for $24.6 billion.

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It is one of the biggest deals in the history of the U.S. grocery industry. The deal is expected to face a rigorous review by the Federal Trade Commission.

The combination would give Kroger and Albertsons—the largest and second-largest U.S. supermarket operators—greater scale and increased leverage in negotiations with vendors.

The deal would also bolster the grocers’ market share and technology to compete better with Walmart, the top grocery seller by sales, and Amazon.com which has been expanding its food operations.  

According to the announcement by the companies, "Together, Albertsons Cos. and Kroger currently employ more than 710,000 associates and operate a total of 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centers. The combination creates a premier seamless ecosystem across 48 states and the District of Columbia, providing customers with a best-in-class shopping experience across both stores and digital channels."

“It allows us to do things we are doing in an accelerated way,” Kroger Chief Executive Rodney McMullen, who will serve as CEO and chairman of the combined company, said in an interview.

The New York Times reports, “A 2008 study conducted by Orley C. Ashenfelter, an economist at Princeton, and Daniel S. Hosken of the Federal Trade Commission, found that in four of the five mergers they evaluated, prices appeared to have increased between 3 and 7 percent. The authors cautioned that the study was not necessarily a reflection of the impact of all deals. It is unclear whether the dynamics have changed in the years since."

And, the Times added, "But any increase in prices now could have a painful impact, as food prices, in general, continue to shoot up. The cost of food across the United States last month rose 11 percent from the year before, according to the Bureau of Labor Statistics."