Kroger CEO: "Amazon is a Stealthy Competitor

Rodney McMullen, Chief Executive Officer of Kroger, has an article from 2017 titled "How Amazon is Crashing Kroger's Party" on his desk, serving as a daily reminder that Amazon is an increasingly significant competitor. McMullen emphasized before a federal judge that Amazon will be an even more notable rival in five to ten years than it is today. The U.S. Federal Trade Commission (FTC) aims to block Kroger's $24.6 billion acquisition of Albertsons. They argue that the merger of the two largest traditional supermarket chains would result in higher prices for consumers and lower wages for employees. McMullen, on the other hand, insists that the merger is necessary to compete more effectively on a national level against rivals like Costco, Amazon, and Walmart. Albertsons' CEO Vivek Sankaran, who testified after McMullen, described the agreement with Kroger as the most significant decision of his career. Since 2019, Sankaran has been striving to reduce the company's costs, focusing on the sale of fresh and high-quality foods and expanding online commerce. Historically, the supermarket industry underestimated Walmart as a serious competitor until it opened supercenters in the 1990s, taking up to 35% of Kroger's revenue in certain areas overnight. McMullen recalls that many traditional retailers realized this too late. During his tenure as CEO, McMullen has navigated Kroger through the challenges of online shopping, the pandemic, and inflation. His goal is to diversify the company's operations, which has been achieved through partnerships and expansions. A noteworthy move was the collaboration with Ocado Group to build warehouses for online orders. Furthermore, Kroger plans to invest one billion dollars annually in price reductions if the merger with Albertsons is successful. McMullen has publicly and before investors pledged this, despite the fact that this promise is not legally binding. Should the deal fall through, Albertsons might face tough decisions like layoffs or store closures. Nevertheless, Sankaran acknowledged that Albertsons is financially solid, with a profit of $4.3 billion in the last fiscal year.