Morningstar analyst Zain Akbari agreed the deal could be an inflation fighter for Kroger – if it is ultimately approved.
“While we believe a combination between the two largest pure-play grocers in the United States would create scale benefits (and associated cost and purchasing leverage) that would help fend off burgeoning omnichannel titans Walmart and Amazon, we suspect overlap between the two chains’ footprints in many markets may lead regulators to scrutinize a transaction closely,” Akbari wrote in a note to investors Thursday.
Not everyone thinks lower prices will result from the merger.
Sarah Miller, executive director of the American Economic Liberties Project, told Reuters the deal would “squeeze consumers already struggling to afford food.”
“This merger is a cut and dried case of monopoly power, and enforcers should block it,” Miller said.
Gade said that regulatory review will make it hard for Kroger to close the deal quickly. But eventually, he expects the company’s bigger purchasing power to translate to lower prices at the cash register.
“We wouldn’t expect tomorrow store prices to fall, unfortunately,” Gade said. “It will take some time, the data that we’re seeing the buying power that we should be able to see from the two combined entities, that should hopefully ultimately help the consumer.”