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Kroger made about $2B in profit against about $145B of expenses: https://finance.yahoo.com/quote/KR/financials/ https://finance.yahoo.com/quote/KR/financials/

Kroger made about $2B in profit against about $145B of expenses: https://finance.yahoo.com/quote/KR/financials/ https://finance.yahoo.com/quote/KR/financials/ Albertson's was a bit better, earning $2B in profit against $77B in expenses: https://finance.yahoo.com/quote/ACI/financials/ https://finance.yahoo.com/quote/ACI/financials/ (Look at cost of revenue + Operating expenses) IOW - These businesses are not awash in cash and profits. A slight increase in costs (wages, etc) would wipe out their profits or put them in the red. A slight decrease in costs or increase in prices would help their business quite a lot. Also, the grocery business overall is very fragmented and local, despite some large chains. And grocers most certainly do not have any ability whatsoever to control market prices or market wages. They are "price takers" in both cases. Their combined market share would be only ~12%, putting them in second place behind Walmart at ~18% https://www.foodnavigator-usa.com/Article/2022/10/14/kroger-to-acquire-albertsons-for-24.6bn-solidifying-its-position-as-2-grocery-retailer-with-11.8-market-share# https://www.foodnavigator-usa.com/Article/2022/10/14/kroger-... There is a long, thick (hold your jokes) tail of grocery stores getting the remaining 3/4 of the market. This is not even remotely a monopoly situation.

no_wizard 3y ago
>IOW - These businesses are not awash in cash and profits. $2 Billion is nothing to sneeze at. Not "we make 39 billion a quarter" good but how is this not a healthy business that is unable to compete on their own? Grocery isn't a fast changing iterative business like software, for example
- Nifty3929 3y ago
  It's all relative to scale. This is why I included the expense numbers as well. No, these are not particularly "healthy" businesses. They are getting by, no more. A small misstep or exogenous event could be a catastrophe.
- hnburnsy 3y ago
  Spending $1.45 to make two cents seems like a poor use of resources and we should be happy that someone is even in this business.
  - asadotzler 3y ago
    they literally make it up in volume or they wouldn't be doing it. no one's running any charities here.
InSteady 3y ago
As you identify in your post, the grocery business is highly localized. The FTC identified a ton of cities where their merger would significantly reduce competitive grocery store options. In my city, there are already regions where it's basically a food desert besides the local Kroger and Albertson's chain. If they merge, probably one of the two shuts down, but even if not, the lack of competition means the entire community is at the whims of the regional manager in terms of prices, employment, and overall store quality.
toomuchtodo 3y ago
Regardless of your financials provided, the consolidation (once combined) increases their power against suppliers, workers, and consumers. The business must be kept in tension as a defense against well worn maliciousness of corporate actors. If their costs go up (labor, food suppliers), their prices will go up (and perhaps some margin impact). Combined, they will do the same as landlords, chicken processors, pharma, and so on if allowed to do so: use their power to entrench, collude, and extract. Being in business should not be comfortable. Competition and limited corporate power is the desired end state, work backwards to implementation details. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/market-leading-us-companies-consolidate-power-in-era-of-superstar-firms-73773141 https://www.spglobal.com/marketintelligence/en/news-insights... https://www.politico.com/news/magazine/2023/04/21/matt-stoller-hawley-trust-busting-00092679 https://www.politico.com/news/magazine/2023/04/21/matt-stoll... “Fundamentally, my view is that authoritarianism is coming from the private sector.” -- Matt Stoller (this post's author)

no_wizard 3y ago

>IOW - These businesses are not awash in cash and profits. $2 Billion is nothing to sneeze at. Not "we make 39 billion a quarter" good but how is this not a healthy business that is unable to compete on their own? Grocery isn't a fast changing iterative business like software, for example

Nifty3929 3y ago
It's all relative to scale. This is why I included the expense numbers as well. No, these are not particularly "healthy" businesses. They are getting by, no more. A small misstep or exogenous event could be a catastrophe.
hnburnsy 3y ago
Spending $1.45 to make two cents seems like a poor use of resources and we should be happy that someone is even in this business.
- asadotzler 3y ago
  they literally make it up in volume or they wouldn't be doing it. no one's running any charities here.

InSteady 3y ago

As you identify in your post, the grocery business is highly localized. The FTC identified a ton of cities where their merger would significantly reduce competitive grocery store options. In my city, there are already regions where it's basically a food desert besides the local Kroger and Albertson's chain. If they merge, probably one of the two shuts down, but even if not, the lack of competition means the entire community is at the whims of the regional manager in terms of prices, employment, and overall store quality.

toomuchtodo 3y ago

Regardless of your financials provided, the consolidation (once combined) increases their power against suppliers, workers, and consumers. The business must be kept in tension as a defense against well worn maliciousness of corporate actors. If their costs go up (labor, food suppliers), their prices will go up (and perhaps some margin impact). Combined, they will do the same as landlords, chicken processors, pharma, and so on if allowed to do so: use their power to entrench, collude, and extract. Being in business should not be comfortable. Competition and limited corporate power is the desired end state, work backwards to implementation details. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/market-leading-us-companies-consolidate-power-in-era-of-superstar-firms-73773141 https://www.spglobal.com/marketintelligence/en/news-insights... https://www.politico.com/news/magazine/2023/04/21/matt-stoller-hawley-trust-busting-00092679 https://www.politico.com/news/magazine/2023/04/21/matt-stoll... “Fundamentally, my view is that authoritarianism is coming from the private sector.” -- Matt Stoller (this post's author)