It has always been difficult for small businesses to get a foothold against their larger counterparts. Small companies have to rely more on the connections they form with customers and carving out a unique brand identity. Large corporations come with operational difficulties, yet higher cashflow allows for more market testing and opportunities to grow. In the past few years, we have seen a significant shift in these dynamics in the restaurant, retail, and grocery industries. Larger corporations are no longer content with keeping out small business or edging out their rivals in market share, they want to consume them. This consolidation is creating more super corporations that widens the gap and leaves larger chains in fear of being bought out or dismantled for parts. It has created a tenuous atmosphere and recent acquisitions have shown us that anything is possible.

Merging has always been a factor in reshaping market share, yet there has been an increase in the types of mergers and acquisitions in the three industries outlined above. Acquiring another company to help fend off a competitor is a tried-and-true tactic in business. One of the best examples of this is the 2016 acquisition of Jet.com by Walmart. Walmart purchased the company solely to bolster their own online offerings against Amazon and the move paid dividends as the two giants are at the top of digital retail. We can even look back to the 1970’s Yum Brand’s acquisition of Pizza Hut and Taco Bell that launched them into the upper echelon of fast-food chains.

What we are seeing now is the purchase or merger of two seemingly dominant chains in a bid to establish the kind of relevancy of a Walmart or Amazon. Last year, Kroger agreed to purchase Albertsons in a shocking deal between two of the largest grocery chains in the U.S. The newly merged company could upend the grocery market and send competitors scrambling to make acquisitions of their own. The deal has drawn scrutiny from antitrust regulators and in response the two companies are selling $1.9 billion in assets including over 400 stores. This move will likely appease regulators, yet it will do little to prevent the newly combined company from being a goliath that can decimate most competition. We have already seen the aftershocks of this deal as Aldi has agreed to purchase Southeastern Grocers and all of their Winn Dixie and Harveys Supermarket locations. Aldi has been aggressively expanding and the joining between Kroger and Albertsons narrowed their path to success. The acquisition of an established grocer was the fastest way to compete and others like Amazon and Target have made it clear that they are looking to expand their grocery offerings in a bid to consume whatever market share is left.

It’s not just grocery stores that are experiencing this trend. Pharmacies have undergone an overhaul with Winn Dixie exiting the pharmacy business following their acquisition by Aldi and competitors CVS and Walgreens have purchased the assets. There is also the recent bankruptcy filing by Rite Aid and the announcement that they will close more stores. The company may not close entirely, yet it is likely that industry leaders like CVS, Walgreens, and Walmart are waiting in the wings to purchase any assets should they come available. Restaurants have not been immune to this trend either with multiple acquisitions made my rising Fat Brands and Inspire Brand’s purchase of Dunkin’ in 2020. McDonald’s is still outpacing their competition, yet it is clear that competitors view merging as a path to challenge these long-established leaders.

There is obvious concern about what a handful of powerful consolidated companies can do to an industry. Regulatory agencies will have their say and could make some deals more complicated, yet historically large mergers and acquisitions are eventually approved. We may see the gulf between large and small companies widen and it could become nearly impossible for a newcomer to break into a market. On the other side, the deals mentioned in this article took people by surprise and represent how opportunity can present itself anywhere and that is difficult to predict what will happen next in any industry. For more information or to acquire detailed datasets, please visit our Rite Aid Bankruptcy data page.