The merger of the Kroger and Albertsons supermarket chains may turn the company into one of the largest advertising outlets in retail.
Key Details
- Retail advertising has started becoming more profitable than grocery sales for major retailers—which involved using websites, apps, and collected user data to spread advertising and messages. Retailers create networks and sell advertising space and data, allowing for targeted advertising to customers.
- The merger of Kroger and Albertson has the potential to turn the new company into one of the largest retail advertising outlets in the U.S.—making it a leading company in one of the fastest-growing economic sectors.
- “Walmart, Amazon.com Inc., and Instacart Inc. dominate the retail ad space with 25.5%, 22%, and 20.6% market share, respectively, as of August 2022,” says The Wall Street Journal.
- “Total revenue from retail ad sales in the U.S. will increase 31% this year to $40.81 billion, which is more than three times its 2019 total,” the Journal continues.
Why it’s important
Kroger entered retail advertising in 2015 and Albertsons in 2021. The combined reach of both companies would create a major base of first-party data and advertising reach—allowing the new company to emerge as one of the largest advertising companies in U.S. retail.
“The merger of Kroger and Albertsons would create a fourth market leader at more than 13% market share,” says The Wall Street Journal.
Backing up a bit
As we previously reported, the two large supermarket chains have announced the intention to merge in a $25-billion purchase. The merger, expected to close in 2024, would turn the combined company into one of the U.S.’s largest employers with over 710,000 employees, $200 billion in sales, and 5,000 locations.
Retail marketing would only increase the viability of the deal and create more opportunities for both companies together to reach a much wider market.
The size of the new company has already alarmed anti-trust advocates who fear the new company may negatively impact the tens of millions of consumers and thousands of employees working for the company. It may need to spin off as many as 400 stores into a new entity to clear anti-trust concerns.
Notable quote
“For retailers, digital advertising solutions represent an incremental, high-margin revenue stream. For shoppers, advertising can provide an improved experience, with ads that are relevant to their needs and content that enhances the overall customer journey. For advertisers, it offers unique opportunities to target and engage shoppers when they’re in the shopping mindset,” says L.E.K. Consulting.
