Fresh from the breakup of the proposed Kroger-Albertsons merger, company executives and union leaders are negotiating new contracts for the supermarket chains’ Colorado employees.
The bargaining is taking place as Kroger and Albertsons are locked in a bitter back-and-forth following two separate court decisions against the $24.6 billion consolidation of the nation’s two largest grocery store operators. A day after the Dec. 10 rulings by a federal court in Oregon and a Washington state court, Albertsons called off merger plans and announced it is suing Kroger for not doing enough to win approval of the agreement.
Albertsons is seeking a $600 million breakup fee and billions of dollars in damages.
Kroger disputed the allegations and accused Albertsons of “repeated intentional material breaches and interference throughout the merger process, which we will prove in court.”
As the companies bicker at each other, members of the United Food and Commercial Workers union, which opposed the merger, are denouncing the companies for spending billions on plans to consolidate and on share buybacks to benefit shareholders. Kim Cordova, president of UFCW Local 7 in Colorado and Wyoming, called the buybacks a massive giveaway to shareholders at a time when the stores need more staffers and repairs and customers need a break from high prices.
“Members have been doing the job of four to five people,” Cordova said. “You can go into the stores and see that product is not on the shelves. It’s not a supply issue. It’s in the back room. They just don’t have anyone to put it out.”
Departments in stores have to close early because of inadequate staffing and there aren’t enough people to hang all the tags when prices are changed, Cordova added. Staffing is a major issue for the union.
Officials with the UFCW in the Northwest and Southern California said their members have reported similar problems.
Even before the proposed merger collapsed, Cordova said the companies were pushing concessions by the union in the opening rounds of contract talks.
“I doubt we’re going to see any price reductions in groceries. They have to make up this money they spent in legal fees fighting for the merger,” Cordova said.
The union represents employees at the Kroger-owned King Soopers and City Market stores in Colorado and Safeway, owned by Albertsons. Contracts with both companies expire early Jan. 5.
The union is mischaracterizing Kroger’s actions and intent, the company said in a statement.
“Since announcing the merger in 2022, we paused our share repurchase programs. Now that Kroger has terminated the merger agreement, the company is in a position to resume share repurchases, reflecting the Board’s confidence in our balance sheet strength and ability to maintain our commitment to investing in America to lower grocery prices, raise associate wages and support local communities,” Kroger said.
The company has invested $2.4 billion in incremental wage increases and industry-leading benefits since 2018 and has spent up to $3.8 billion annually “to build new and remodel stores, food processing and other facilities, improve the customer experience and create additional job opportunities,” Kroger said.
For the holidays, Kroger is offering savings on food, home products, fuel and delivery service, the company said.
Asked about the union’s criticisms, Albertsons said in a statement that it’s in negotiations with the union and declined to comment.
Contract negotiations led to a strike by thousands of King Soopers employees across metro Denver in January 2022. King Soopers and the union reached an agreement 10 days later, but the strike still reverberates today. The labor dispute figured in Colorado Attorney General Phil Weiser’s lawsuit against the merger.
Weiser sued in February, seeking to block the Kroger-Albertsons merger on anti-trust grounds. Weiser argued that combining the state’s largest grocery store chains would drastically reduce competition and harm Colorado shoppers, workers and suppliers.
The lawsuit also accused the supermarket chains of an illegal deal in which Albertsons agreed not to hire any King Soopers employees or solicit any of its pharmacy customers during the 2022 strike. Weiser is seeking a $1 million penalty from each company.
The companies have denied the claims.
Attorneys for the state, Kroger and Albertsons are expected to submit briefs to Denver District Judge Andrew Luxen in January on whether a decision in Colorado’s lawsuit is moot after the other two rulings.
The alleged deal between Albertsons and King Soopers is the subject of a lawsuit filed in November by a King Soopers employee. The complaint is seeking higher wages, benefits and damages for thousands of grocery workers whose bargaining rights it says were undercut by Kroger and Albertsons.
The union’s contracts with stores owned by Kroger and Albertsons are expiring in the next few months in the Pacific Northwest and Southern California. As in Colorado, staffing levels are expected to be at the top of employees’ concerns.
John Marshall, capital strategies director of UFCW Local 3000 in the Northwest, said data collected by the union from the Occupational Safety and Health Administration shows that Kroger has reduced employees’ hours since 2019. When the COVID-19 pandemic hit in 2020, Kroger’s annual labor hours increased about 5% nationally and 3% in Colorado, Marshall said.
“That’s what you would expect. Restaurants closed down. Institutional dining facilities closed down. There was a rush of customer traffic to grocery stores,” Marshall said.
But starting in 2021, Kroger started reducing labor hours each year, according to the union. Labor hours between 2019 and 2023 dropped 13.8% nationally and 18% in Colorado, Marshall said. Albertsons’ labor hours rose slightly, but the company had been understaffed for a while so it was starting at a lower level, he said.
Conor Hall has worked in the deli at a Boulder King Soopers for seven years. He said while there had been a pattern of declining employee hours from year to year, the cuts ramped up before the proposed merger was announced in October 2022. The total labor hours for the store generally ran from 400 to 500 a week, but dropped to around 300.
Hall said that leaves him and his coworkers performing a kind of triage to keep the deli running. He worries about the impacts on customer service. Seeing how busy the employees are, some customers apologize for bothering them.
“But that’s exactly the job we’re here to do,” Hall said.
When they announced the merger plan, Kroger and Albertsons said they needed to consolidate to better compete with Walmart, No. 1 in the country for grocery sales, and other nonunion super centers. However, union members fault the two supermarket chains for not building more stores to expand their share of the market.
“If you look at the way that Costco, Walmart and Trader Joe’s have grown market share, they’ve done it through a very simple strategy: they’ve opened new grocery stores,” Marshall said.
But Kroger’s financial records show that its overall number of stores declined from Jan. 30, 2016, to Feb. 3, 2024, from 2778 stores to 2722 stores, Marshall said. In contrast, he said Costco adds 20 new stores a year.
“Kroger and Albertsons just got through talking about how intimidating it is to try and compete against Costco,” Marshall said. “Why don’t they try to do what Costco does, invest in growth, invest in their stores, do a better job of operating grocery stores?”
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