CINCINNATI — As the Federal Trade Commission fretted last year about what would happen if Kroger Co. became a dominant grocery chain in cities where it now competes against Albertsons, Kroger was busy dominating all other rivals in its hometown.
And in the process, it may have refuted the FTC’s claim that Kroger’s acquisition of the Albertsons chain will lead to higher prices.
Kroger’s Greater Cincinnati market share increased to 50.1% in 2023, up from 45.8% one year ago, according to data from Chain Store Guide. That means local shoppers spent $4.2 billion with Cincinnati’s largest company last year, nearly three times the amount claimed by Walmart and six times that of third-ranked Meijer.
“If you’re good at what you do, you can obviously take market share from Kroger,” said James Lewis, a portfolio manager for Bartlett Wealth Management. “The problem is that Kroger has such scale in this area, they’re able to pass that scale along to the shopper in terms of lower prices. It’s like a continuing circle. You pass along that savings. That entices market-share growth because consumers will come into your stores for that savings.”
Kroger rivals aren't standing pat in Cincinnati. Whole Foods recently announced a new store in Liberty Township, while Publix confirmed two new locations will open in Northern Kentucky.
California-based Grocery Outlet is planning to open its first local store in Eastgate by the end of May. Aldi plans to open a Miami Township store this year that would bring its local store count to 19.
None of those stores will make it easy for shoppers like Paige Rogney to end her regular visits to the Eastgate Kroger.
"I get coupons mailed to me and I use their app," Rogney said. "And then I also use their program so I can get points off gas. With the app, you can put it in shopping mode and it tells you the aisle to go to. So I’m in and out very quickly."
Lewis said those are all reasons it will be tough for any competitor to take market share from Kroger in the future.
But its pricing advantages are more relevant at the moment because they're happening in a city where Kroger already dominates. The FTC is trying to keep Kroger from duplicating that dominance in cities where it now competes against Albertsons.
“In hundreds of those communities, the proposed acquisition would create a single supermarket with market shares so high as to be presumptively unlawful under the antitrust laws,” the FTC argued in one court filing. “The proposed acquisition would also eliminate the substantial head-to-head competition between Kroger and Albertsons that exists today, which risks higher prices and lower quality for consumers.”
In a response to the FTC’s claims, Kroger said the point of the merger is to save money that can be used to reduce prices — not raise them.
“From the outset, Kroger has publicly committed to reinvest the savings generated by the transaction to lower Albertsons’ prices, which will directly benefit consumers across the country. These efficiencies are not just aspirational; they are supported by Kroger’s track record of lowering prices for consumers after past acquisitions, which the Commission’s Complaint ignores,” the company wrote.
To determine whether consumers would be better off if Kroger was prevented from gaining market share, the WCPO 9 I-Team obtained data on grocery prices from the Council for Community Economic Research.
It shows grocery prices are above the national average in Cincinnati. But they're also lower than in than seven of the 10 cities where Kroger overlaps with Albertsons the most.
“That tells me the FTC has a very weak argument,” Lewis said. “In Cincinnati market, it’s obvious that Kroger is passing along those lower prices to consumers.”
The I-Team chose cities - including Denver, Dallas, Las Vegas, Portland and Seattle - that Bernstein Research identified as "problem markets" in a May 2023 analysis of antitrust risk for the Kroger-Albertsons merger.
In most of the cities, Kroger and Albertsons have a lower combined market share than Kroger currently has in Cincinnati. But Cincinnati's lower grocery prices could be caused by other factors other than competition, said Beth Johnson, a client strategist who tracks the grocery industry for the marketing firm, Vericast.
"The city with the most competition, I wouldn’t necessarily say has the lowest prices," Johnson said. "It could be the product selection, where those products are coming from, what’s the labor? What’s the overall cost of living?"
