Two of the biggest supermarket chains in the U.S., Albertsons and Kroger, have announced a $24.6 billion merger, which is set to reorganize a large chunk of the U.S. grocery business if approved by regulators. 
The companies employ a combined 710,000 employees and operate a total of 4,996 stores, 66 distribution centers, 52 manufacturing plants,  3,972 pharmacies, and 2,015 fuel centers, according to a press release, with a geographic footprint that spans 48 states. 
The grocery giants are pitching the merger as an opportunity to improve operations, boost employee wages, and increase shareholder value. 
Albertsons store in Buellton, California. Credit: Geri Lavrov / Contributor -- Getty Images
"We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities, and shareholders," said Rodney McMullen, CEO and chairman of Kroger, who will lead the combined company. 

Lower Prices? 

In addition, Kroger emphasized that the merger would help it lower prices, something that is likely to resonate with consumers amid widespread inflation. (The price of food is up 8.5 percent from a year ago, according to the latest consumer price index.)
"Kroger has a long track record of lowering prices, improving the customer experience, and investing in its associates and communities," said the company. "Consistent with prior transactions, Kroger plans to invest in lowering prices for customers and expects to reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers."
One way the combined company plans to do that is by expanding its selection of private label products, which are generally cheaper and have become a major selling point for grocery stores trying to retain inflation-pressured customers. At the moment, the two brands have a combined portfolio of  34,000 total private label products. With an "increased manufacturing footprint and expanded national reach," that could expand. 

Making Investments 

Kroger also announced that an "incremental" $1.3 billion will be invested in Albertsons to "enhance the customer experience," as well $1 billion in the combined company to "continue raising associate wages and comprehensive benefits after close."
While Kroger is the senior partner in the deal, there is some evidence that Albertson is bringing in more customers. 
A foot traffic analysis from Placer.ai, a data company tracking the retail sector, showed that visits to Albertson were up 2.9 percent in the first week of October from the same week in 2019, while visits were down 6.7 percent at Kroger stores over the same period.