What will a Kroger-Albertsons merger mean for grocery stores in Dallas-Fort Worth?

A merger of Kroger and Albertsons, two of the largest supermarket chains in the U.S., could bring changes to some of their existing locations in Dallas-Fort Worth, where both brands have heavy penetration in the market.

News broke late last week about plans for the $24.6 billion merger. Kroger confirmed the talks Friday and announced plans to acquire Albertsons. While the potential deal has faced some public opposition, the grocery giants could generate $209 billion in annual revenue.

With 5,000 combined stores across the country, a Kroger-Albertsons merger would position the chain competitively against the country’s largest grocers, Walmart, Amazon and Costco. Kroger and Albertsons each operate a family of other grocery store banners, including Tom Thumb, Ralphs, Harris Teeter, Fred Meyer, King Soopers, Safeway and Vons.

The grocery giants haven’t said much about the deal beyond Kroger’s press release on Friday, and the company has declined to comment further. Albertsons said the merger isn’t expected to close for many months.

“Nothing changes about our stores today, and our focus continues to be providing great service to our customers,” an Albertsons spokesperson said. “The merger isn’t expected to close for many months. Until then, Albertsons and Kroger will continue to operate as two separate companies and it is business as usual.”

Ohio-based Kroger has 218 stores in Texas, clustered in the Dallas-Fort Worth metroplex and in the Houston metro, and employs more than 30,000 workers in the state.

Idaho-based Albertsons has 43 stores in Texas, as well as 65 Tom Thumbs.

Here’s what we know about what a merger may mean for grocery shopping in Dallas-Fort Worth.

How likely is the Kroger-Albertsons merger to go through?

The deal faces some antitrust scrutiny and could face opposition from the Federal Trade Commission.

“At a time when food prices are soaring as a result of corporate greed,” Sen. Bernie Sanders said on Twitter, “it would be an absolute disaster to allow Kroger, the 2nd largest grocery store in America, to merge with Albertsons, the 4th largest grocery store in America. The Biden Administration must reject this deal.”

Kroger said it will work with regulatory officials to ease antitrust concerns. The company’s chief financial officer, Gary Millerchip, said in a call with investors Friday that the companies anticipate divesting 100 to 375 stores.

Kroger said the merger will allow for lower food prices amid high inflation across the grocery industry.

Another possibility for the grocery chains beyond selling existing stores is creating a spin-off subsidiary to operate as a standalone company by Albertsons’ current shareholders.

What is the driving force behind the expansion?

Grocery industry expert Mark Hamstra said his first impression of the deal was that Kroger has long desired to expand into some major markets where Albertsons has traditionally had a strong presence.

“(Albertsons) has stores throughout the Northeast, Mid-Atlantic and New England, where Kroger really doesn’t have much of a presence at all,” said Hamstra, a freelance business writer for Supermarket News. “So I think that’s probably at the heart of Kroger’s interest in acquiring Albertsons.”

But this could mean closure of some stores in the Dallas-Fort Worth market due to both Kroger and Albertsons’ large presence and the commitment to the FTC to divest hundreds of stores.

“A lot of the stores won’t be included in final acquisition markets, particularly in some of the markets in Texas and the West Coast where both companies already have an extensive store footprint,” Hamstra said.

The FTC may not allow some stores close to each other to be included in the acquisition, to prevent a monopoly on the market, Hamstra said. Kroger and Albertsons already anticipate that happening, so they’ve selected stores they’re going to spin off, Hamstra said. Some stores could end up closing.

This could affect Fort Worth stores like the Kroger and the Albertsons locations just one mile apart near TCU. But Hamstra said he does not think people have to worry too much about losing a nearby supermarket because of the deal.

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“Since both companies are pretty healthy, I don’t anticipate that you’d see widespread store closures from this,” Hamstra said. “I think somebody will end up buying those stores.”

It could be a Kroger competitor or another local, independent grocery chain in a market that’s looking to grow, Hamstra said.

Will we see store rebranding?

Throughout the history of mergers and acquisitions in the supermarket industry, there tends to not be a lot of brand changing.

This proved to be the case when Albertsons purchased Tom Thumb’s parent company, Safeway, in 2015. While Albertsons acquired the high-scale grocery brand, 58 Tom Thumb store locations throughout North Texas retained their name.

“Within the Dallas-Fort Worth market, it might not pay for Kroger to have two different brands operating in the market, so they might convert any stores they acquire there to the Kroger brand,” Hamstra said. “But in a market in the Northeast, they may retain the ACME brand on the stores that Albertsons owns or the Shaw’s brand in New England where those brands are pretty well known.”

Will private-label Kroger or Albertsons brands change?

In terms of product offerings, Kroger and Albertsons both have several private label products. So would the companies decide to keep their individual brands or consolidate under one single name?

Hamstra said it could depend on study of consumer preferences and what brands Kroger thinks will be most successful depending on the market.

“I think there won’t be any loss of private label availability in any stores,” Hamstra said. “It’s just a question of which brands will be retained over the long term. I think initially you’ll continue to see both for a while until inventories run out and corporate makes a decision about which brands to carry.”

Hamstra said efficiency in production and marketing under one name are benefits to consolidating under one brand.

What does the merger mean for other major grocers in North Texas?

The merger could help the combined Kroger-Albertsons company compete against major rivals including Walmart, whose grocery sales accounted for more than one-fourth of all U.S. grocery revenue last year. More than 55% of Walmart’s sales are from groceries alone.

Kroger said the merger positions itself to compete better against “larger and non-union companies,” a reference to Walmart.

“This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors,” Kroger said in Friday’s release.

However, Hamstra doesn’t think the acquisition will have as great of an effect on Walmart and other grocery companies as one might think. Kroger is the biggest traditional supermarket operator in the country, and it already has fairly sharp pricing, Hamstra said.

“Walmart sells more groceries than Kroger on a dollar basis, but as far as being a traditional supermarket operator, Kroger has been the biggest for a long time and they already compete effectively with Walmart and Costco to a degree. They don’t price as sharply as Walmart probably on their groceries but I don’t think this is necessarily going to make them suddenly become a low-price operator like Walmart.”

Walmart did not respond to request for comment.

Texas-based grocery chain H-E-B, which is growing aggressively in North Texas, declined to comment on the merger.