Growth by acquisition and the performance of large food retailers

The latter 1990s witnessed rapid growth among the largest retail food chain companies, much of it through acquisitions. An explanatory motive is that grocery chains could achieve greater scale economies and operating efficiencies, and increase their bargaining power with packaged food manufacturer-suppliers. This article begins to examine whether the largest retailers are realizing the promised financial rewards associated with this growth trend. We examine the performance of the three largest U.S. food retailers, Albertson's, Inc., The Kroger Company, and Safeway Inc., over 7 fiscal years beginning in calendar year 1993 and ending in fiscal year 1999, a period that covers the recent increase in acquisition activity. Overall, we find only modest evidence that the financial returns to the rapid growth strategies of the three largest food retailers have begun to be realized through fiscal year 1999. [EconLit citations: G390, G340, Q130] © 2002 Wiley Periodicals, Inc.