Kroger executives grilled for price hikes in federal court as Fred Meyer strike continues

PORTLAND, Ore. ( KOIN ) – As Kroger continues to defend a national merger with its leading supermarket competitor, Albertsons, at a federal court in downtown Portland, company executives are beginning to face additional scrutiny for hiking prices on certain items for several years.

Meanwhile, Kroger-owned Fred Meyer workers across the Portland region are on strike against what they allege to be unfair labor practices.

“In a surprise to literally no one, Kroger now admits to their post pandemic price gouging on basic goods,” the UCFW Local 555 union said in a statement to KOIN 6 News. “If Fred Meyer is willing to gouge the public on prices, why should workers believe Fred Meyer’s promises to invest in its own employees? We need contractual wages we can live on. Wages that prevent homelessness, now.”

While under questioning by the Federal Trade Commission in a downtown Portland courtroom, a Kroger executive admitted the company had hiked up prices for essential items like eggs and milk above the rate of inflation, as first reported by Bloomberg on Tuesday.

In the article, Bloomberg reported that Andy Groff, Kroger’s senior director for pricing, acknowledged in an internal company email that the company had raised prices more than necessary while adjusting for increased market costs.

In his testimony, Groff admitted to the email in which he wrote, “On milk and eggs, retail inflation has been significantly higher than cost inflation.” He then added that the company’s goal is to “pass through our inflation to consumers.”

Kroger then issued the following response addressing the testimony:

This cherry-picked email covers a specific period and does not reflect Kroger’s decades-long business model to lower prices for customers by reducing its margins.

What’s missing is the fact that Kroger’s retail prices include the cost to run a grocery store, including labor, transportation, advertising and other costs. Many of these costs have significantly increased since 2020. Kroger’s pricing decisions are impacted by factors beyond inflation.

We work relentlessly to keep prices as low as possible for customers in our highly competitive industry. This is especially true for essential products like milk and eggs. Since 2020, these commodities saw significant cost fluctuations for a broad range of products. Despite these challenges Kroger has maintained competitive pricing for milk and eggs, especially compared to Walmart.

Reducing margins to lower prices over time so more customers shop with us is our business strategy, and the strategy we will implement at Albertsons after our merger.

The FTC and some states, including Oregon, argue that the Kroger-Albertsons merger would lead to higher consumer prices, while Kroger claims it would allow them to compete better with major retailers like Walmart.

This controversy came one day before Fred Meyer workers in the Portland area embarked on a week-long strike impacting 28 stores. The strike follows their union’s formal charge, filed on Aug. 20, that Fred Meyer had refused to provide “essential information for current negotiation.”

“Our members are united in demanding fair treatment, which can only be reached if Fred Meyer actually stands behind its public statements and is willing to fulfill all their obligations and legal requirements,” UFCW Local 555 President Dan Clay said. “Our membership came out in overwhelming support of this action and the community has our back.”

One shopper, Justin Godoy, said it feels like “there’s the corporations and there’s everyone else.”

“The CEOs are making a higher bottom line, everything. But it’s a bummer. It affects everyone, you know, on a daily basis,” Godoy said.

In a statement from Fred Meyer, the company said they respect their associate’s right to bargain. They also shared that the Kroger and Albertsons merger would help ensure a future for unionized grocery stores.

“Protecting our associates’ right to collectively bargain is why it is so important to secure the future of unionized grocery stores in America, and that is exactly what Kroger’s proposed merger with Albertsons will do,” the company said.

The strike began Wednesday and is expected to last until Tuesday, Sept. 3. A court decision for the merger isn’t expected for several weeks.

Stay with KOIN 6 News as this story develops.

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