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Merger Might Mean More Dollar Stores

Business

A Kroger delivery truck parked outside of a customer's home. | Photo credit to Kroger by Reuters.

In October, Kroger announced plans to acquire Albertsons. The merger, which is valued at $24.6 billion, has evoked strong responses from politicians and anti-trust experts as well as labor activists.

Beyond the response to the merger, Kroger disclosed that it might also be seeking to add dollar stores to its wheelhouse.

During a recent Senate hearing on the merger, Kroger Chairman and CEO Rodney McMullen said in an exchange with Senator Dick Durbin (D-IL) that Kroger has been piloting “a couple” of smaller stores in rural communities, where many dollar stores are located. This was said to be part of an effort to advance the company in small-town America.

“We’re testing several different areas because we think it’s a business opportunity that the dollar stores principally get. And we’re trying several different approaches to that,” McMullen said, referring to the chain’s intentions to offer its services to more rural shoppers.

McMullen added that Kroger is also trying a new online shopping service. Last year, Kroger launched Hometown Pickup, which allows online shoppers to pick up orders from a Kroger delivery truck at a location of the shopper’s choosing.

Durbin voiced concerns about the rise of dollar stores in regions that have seen their access to groceries dwindle.

“I’m challenging you to think if you’re envisioning the future of supermarkets to consider what’s going on in rural America, in inner cities,” he said. “The markets are closing but dollar stores are opening. And sadly, the groceries that are available to people in those dollar stores are limited, expensive, and really don’t embrace things like fresh produce very often.”

McMullen responded to Durbin’s comments by emphasizing Dollar General’s role in what he dubbed a “business opportunity” by grocery store operators to serve people in rural communities.

“If you look at Dollar General, for example, they have 18,000 locations. We’ve seen that as a business opportunity in terms of serving where they serve, and for us fresh is one of our differences on go to market,” McMullen said.

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