The sign above an Amazon Fresh store in Washington, DC
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The CEOs of Kroger and Albertsons say their proposed merger will help them defend against Amazon.
But Amazon’s market share is a fraction of larger players, including both Kroger and Albertsons.
Walmart and Kroger have been the largest US grocers by sales for years.
The CEOs of Kroger and Albertsons told a US Senate committee on Tuesday that their $24.6 billion proposed merger would help them compete with the likes of Amazon.
Amazon has beefed up its grocery presence through its acquisition of Whole Foods in 2017 and by opening its own chain of moderately priced Amazon Fresh supermarkets. But market share data suggests that a combined Kroger and Albertsons would be much larger by sales than Amazon the day the merger takes place.
“The marketplace for groceries over the past decade has completely transformed, making the competition for consumers fierce,” Vivek Sankaran, CEO of Albertsons, said at the hearing. “The best way to compete with mega stores like Walmart and highly capitalized online companies like Amazon will be through a merger with Kroger.”
Kroger CEO Rodney McMullen also spoke during the hearing. “Kroger is currently ranked fourth in total revenue among US grocery retailers behind Walmart, Amazon, and Costco,” he said. “A combined Kroger and Albertsons will remain at number four as we will continue to compete with these companies to sell groceries.”
But data from Euromonitor says otherwise.
Walmart is the largest grocer in the US, with just over 25% of sales in 2021, according to Euromonitor. Kroger had just over 8%, and Albertsons had roughly 5%, according to the data.
For all of its moves in grocery, Amazon commanded just 1.2% of sales, according to Euromonitor.
Those market shares have been similar since early 2020 when a UBS estimate painted a similar picture. Both estimates put Amazon, including Whole Foods, at no more than 2% of the market. That’s below the share commanded by many regional grocery chains, such as Texas’ HEB.
The entire US grocery market represented $1.27 billion in sales last year, according to Euromonitor.
Walmart “has made strong market share gains across the grocery channel in [2021] as its stores remained open longer and customers consolidated trips,” analysts at UBS led by Michael Lasser wrote at the start of 2022.
Those gains are set to continue, they added, thanks to Walmart’s focus on low prices. Efforts to get consumers to buy more at Walmart in other areas, such as healthcare and fast delivery, will also likely boost its market share.
Kroger, meanwhile, could gain sales as it expands delivery and pickup to more parts of the country through its partnership with the British online grocer Ocado. But the analysts also said Kroger’s investments in e-commerce were taking longer to show returns, which makes its future less certain than that of rivals who are moving faster.
While Amazon is still a small part of the total grocery market, it’s trying to woo customers with one- and two-hour delivery from Whole Foods and its more middle-market Amazon Fresh stores.
The perk is part of its Prime membership, though Amazon added an extra fee to those orders and announced plans to raise the cost of a Prime membership to offset delivery costs.