While the search for a new CEO begins, executive chair Richard Leeds has been appointed as interim CEO. The transition will be effective as of Aug. 9, says Global Industrial.

New Global Industrial CEO

Leeds joined Global Industrial in 1982 and served as its chair and CEO from 1995 until becoming executive chair in 2016. He also previously served as president of the Company’s Industrial Products Group until 2011.

Global Industrial didn’t provide a specific reason for Litwin’s departure, but he is leaving on good terms.

“Mr. Litwin’s resignation is not the result of any disagreement with the Company on any matter relating to the company’s operations, policies, or practices,” according to a filing with the U.S. Securities and Exchange Commission.

Litwin was appointed CEO of the company in 2019 and has served as director since 2017. He was previously the CEO of Adorama, Inc., a retailer of professional camera, audio, and video equipment. He has also served in executive roles overseeing the ecommerce businesses and digital strategy for Sears Holdings, Inc., Office Depot, and Newark Electronics Inc.

In 2023, Litwin received total compensation of $2.775 million, including a base salary of $983,700, according to Global Industrial’s proxy filing. As executive chair, Leeds was paid a salary of $950,000 and received total compensation of $980,000, according to the filing.

Global Industrial Co. started its 2024 fiscal year on a positive note, growing net sales year over year.

Global Industrial revenue was $323.4 million for the first quarter ended March 31. That’s an 18.1% increase over $237.8 million in Q1 2023. More than 60% of sales take place online.

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On June 2, following the FTC’s announcement, Tempur Sealy responded in a public statement. It objected to the decision as it prepares for the government’s lawsuit to proceed in the U.S. District Court for the Southern District of Texas.

Tempur Sealy ecommerce sales by year

Tempur Sealy is No. 156 in Digital Commerce 360’s Top 1000. The database includes a ranking of North America’s leading retailers by online sales. Mattress Firm is No. 274. Digital Commerce 360 sorts both companies in the Housewares & Home Furnishings category. Additionally, Digital Commerce 360 projects total ecommerce sales for Tempur Sealy in 2024 will be $5.52 billion.

Why the FTC is challenging Tempur Sealy’s Mattress Firm acquisition

“Through emails, presentations, and other deal documents, Tempur Sealy has made it abundantly clear that its acquisition of Mattress Firm is intended to kneecap competitors and dominate the market,” said Henry Liu, director of the FTC’s Bureau of Competition, in the FTC’s announcement. “This deal isn’t about creating efficiencies; it’s about crippling the competition, which would raise prices on an essential good and could lead to layoffs for good paying American manufacturing jobs in nearly a dozen states.”

In the FTC’s official complaint, regulators called Mattress Firm “the single most important retail channel for mattress brands.” They also claimed that it “can drive massive volumes of sales through its unmatched consumer reach. They added that “mattress brands jostle to access its floor space.” In that context, the commissioners believe that permitting Tempur Sealy to merge with Mattress Firm “would upend this competitive dynamic, giving Tempur Sealy enormous sway over the fate of its rivals.”

Moreover, the filing also cites “Tempur Sealy’s history of using exclusionary deals to block rivals.” In addition, the FTC asserted that “this acquisition would further cement its dominance and deprive independent brands of the opportunity to engage in free and fair competition.”

“Because this proposed acquisition may substantially lessen competition or tend to create a monopoly, it should be enjoined,” the complaint states.

Tempur Sealy’s defense of the merger

In defense of its proposed deal, Tempur Sealy disputed the FTC’s assessment.

“Tempur Sealy has been working constructively with the FTC to secure regulatory approval for this transaction and is disappointed that the FTC has initiated litigation,” a statement from the company read. “We appreciate their efforts to understand the industry and the proposed transaction, but ultimately believe the FTC’s perspective does not reflect all the relevant facts and law.”

Offering its own view of the bedding industry, it painted a very different picture of the merger’s implications.

“The bedding industry is highly competitive, offering consumers a diverse selection of products, brands, price points, and purchasing channels,” Tempur Sealy stated. “There are thousands of brick-and-mortar storefronts across the United States where consumers can purchase bedding products, only a small fraction of which are operated by Mattress Firm. Additionally, brick-and-mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year.”

Ultimately the mattress brand stands by its intention to complete the deal. It concluded by expressing that confidence to shareholders in its release.

“We believe that a successful litigation process can be completed in the coming months, which would allow us to close the transaction in late 2024 or early 2025,” Tempur Sealy said.

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CEO Rodney McMullen said in an earnings call with investors that Kroger expects customer sentiment “to continue improving” as inflation moderates. But for now, many are “managing economic uncertainty.”

“As we’ve seen over recent quarters, customers continue to seek value and are shopping with us differently based on their financial situations,” McMullen said. “Spending from premium and mainstream customers continue to be strong.”

He added that Kroger is starting to see positive signs among its “most budget-conscious households.”

Kroger has moved up to No. 6 in the Top 1000, Digital Commerce 360’s database ranking the largest online retailers in North America. Kroger is first in the Top 1000’s Food/Beverage category. However, it competes with Mass Merchants that rank higher than it in the Top 1000 — Walmart and Target — for online grocery sales.

Kroger digital sales

In Q1, Kroger said, it accelerated its digital presence by increasing delivery sales 17% year over year. It also increased digitally engaged households 9% year over year.

Kroger digital sales increased more than 8% in Q1, said Todd Foley, interim chief financial officer, in the earnings call. For total Kroger sales, which increased to $45.3 billion in Q1, gross margin was 22.4% of sales. Whereas total sales increased slightly from $45.2 billion in the previous year’s Q1, gross margin decreased slightly (down seven basis points), he said.

McMullen said delivery and pickup both grew in the quarter. Kroger’s delivery team has improved fill rates, he said. That refers to the number of orders Kroger can ship from its available stock. It also reduced wait times and improved on how many of its orders were delivered without error, he added.

“Through the power of machine learning and AI, we are developing new ways to elevate the pickup experience for customers and at the same time reduce costs,” McMullen said. “With dynamic batching of orders, these tools are providing associates the most effective pick routes, which is enabling us to dramatically reduce pick lead time in our highest volume stores.”

Additionally, he said customers love Kroger’s delivery experience for refrigerated products. The Kroger delivery network has nearly doubled sales year over year in Q1, he said.

Personalization and retail media at Kroger

Personalization has helped Kroger engage with more digital customers, McMullen said. As a result, Kroger customers clipped 18% more digital coupons than they did in the year-ago quarter.

“Capturing more digital households is a key to our long-term growth model as these households are more loyal, spend nearly three times as much with us and drive our alternative profit businesses,” McMullen said.

Meanwhile, McMullen said Kroger Precision Marketing, the company’s retail media network, is on pace to meet full-year expectations of more than 20% growth. Kroger Precision Marketing added new capabilities with Meta on June 19, he said. It continues to “broaden its reach by offering its custom audiences and ad measurement capabilities to advertisers on the Meta social media platforms.”

McMullen said this will create more opportunities for clients to reach relevant audiences in more places.

Possible Kroger merger with Albertsons

McMullen told investors that Kroger believes its updated divestiture plan meets regulators’ concerns and will put the company in a better position to complete its merger with Albertsons.

Kroger and Albertsons announced in April a plan to sell grocery stores to C&S Wholesale Grocers. This came in response to a statement the Federal Trade Commission had released in late February calling the proposed Kroger-Albertsons merger “anticompetitive” and suing to block the $24.6 billion acquisition.

McMullen said the proposed divestiture “positions C&S to be a strong and successful competitor.”

Albertsons ranks No. 24 in the Top 1000. C&S currently does not rank in the Top 1000.

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Cookies have long been an essential piece of online advertising, mainly because they track a consumer’s activity across the internet so advertisers can serve them relevant ads. They power what the research firm eMarketer estimated would be a $600 billion annual online advertising industry in 2023.

Now, Google is phasing them out after years of concerns over privacy. Meanwhile, cookies’ retirement has been repeatedly pushed back. Most recently, Google delayed its plans to enact the phaseout by the end of 2024 into early 2025 after restricting cookies for 1% of all Google Chrome users in January.

“We recognize that there are ongoing challenges related to reconciling divergent feedback from the industry, regulators and developers, and will continue to engage closely with the entire ecosystem,” the tech giant said in an April blog post. 

That gives retailers some more time to fine-tune their plans.

How do retailers use third-party cookies?

Cookies are a tool retailers use to reach consumers and show them relevant advertisements. They’re used to keep consumers logged in to a retailer’s website, identify them and serve them ads. 

For example, cookies allow a retailer’s website to maintain a consumer’s shopping cart if she closes and later reopens the website. Moreover, they allow advertisers to show ads related to products a consumer was already looking at. 

Google’s cookie deprecation refers to third-party cookies, the kind that are used to serve these curated ads.

Despite the long lead time for the phaseout, advertisers still lean on cookies. A 2023 Adobe survey of 2,667 marketing and customer experience leaders found that 75% rely heavily on cookies. 45% spend at least half their advertising budgets on cookie-based targeting.

Nevertheless, 51% of those surveyed also qualified cookies as a “necessary evil,” suggesting that they’re on the hunt for a better solution. Even so, 49% said they don’t have access to enough resources to rethink advertising strategy in a post-cookie world.

Retail media networks present an alternative strategy 

Retail media networks are shaping up to be part of the solution for some of the largest retailers. They are a type of advertising platform where retailers can sell ad space on their own digital channels to third parties. Advertisers can target their ads using the retailer’s first-party data on customers, including information from loyalty programs. Ads can be placed on retailers’ websites, within mobile apps or in stores via screens and displays.

They’re advantageous both as a way of targeting ads and as an additional revenue stream for retailers. 

Many retail media networks are explicitly courting retail advertisers with the threat of a cookieless future. 

“For Walmart Connect, Walmart DSP will provide a solution to huge challenges that brands and agencies teams will face with the cookie deprecation process,” Jonathan Fasano, head of product at Walmart Connect Mexico said in April.

Walmart Connect is Walmart’s retail media network.

“Brands will begin to seek media with vast amounts of consumer purchase data, and we already have it through Walmart Audiences, which will also enable us to understand new audiences and potential new buyers for different categories,” he continued.

Target’s Roundel retail media network has similar information on its website.

“When the cookie apocalypse hits, it will wipe out the current way the industry has built audiences and the performance measurement capabilities used to measure the effectiveness of those audiences,” the website says. “If you don’t have real database and identity resolution tools at the ready to build targeted audiences and measure closed-loop media performance, you will suddenly find yourself relying on pre-digital proxies and methods of measurement.”

It presents the solution of advertising to Target customers through Roundel.

Albertson’s, Macy’s, Best Buy, Home Depot and many others also have retail media networks.

Other strategies as third-party cookies are phased out

Advertisers have proposed other solutions for ad targeting after cookies are finally phased out.

For example, the advertising company Criteo suggests tracking consumers with alternative IDs as a replacement for third-party cookies. These are “browser-based technology which seeks to emulate the functionality of the third-party cookie in a privacy-safe way,” Criteo says.

Alternative IDs work in two ways. The first, deterministic IDs, are based on consumers’ personal information after obtaining their consent and using first-party data. Conversely, probabilistic IDs attempt to identify consumers without any first-party data using signals like IP address, device type and operating system.

Generative artificial intelligence (AI) may also play a role. Using zero- and first-party data to personalize experiences for consumers can be challenging and costly to scale up. Supplement retailer GNC is using generative AI to turn that data into “hyper-personalized” recommendations, former chief information officer Scott Saeger told Retail Touchpoints.

Data clean rooms are another approach touted by Amazon and Walmart. They allow two actors — for example Walmart and an advertiser — to share their first-party data for more insights and precise ad targeting. The benefit of data clean rooms is that they can maintain privacy on the original data set.

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The agreement means that Kroger Precision Marketing will allow Yahoo DSP advertisers to place ads in front of Kroger’s audience. The retail media platform is powered by Kroger’s first-party and purchase-based data.

Kroger ranks No. 6 in the Top 1000, Digital Commerce 360’s database of North America’s leading retailers by online sales. Kroger is also first in the Top 1000’s Food/Beverage category.

Why Kroger’s first-party data is important to Yahoo

“Using first-party data is crucial to future-proof against third-party cookie deprecation, and applying Kroger’s retail data will help to ensure addressability for our advertisers,” said Elizabeth Herbst-Brady, chief revenue officer at Yahoo. “This new offering not only reinforces our privacy-safe approach, but also demonstrates our commitment to interoperability and allows advertisers to activate high-quality data across campaigns through the Yahoo DSP.”

The first-party consumer data that retail media networks use has gained interest as Google prepares for third-party cookie deprecation. The search giant plans to implement full deprecation on Chrome in early 2025. Other browsers have taken steps to block third-party cookies as well, limiting their utility in tracking users across different websites and activities.

Access to Kroger Precision Marketing, which the grocer operates with the retail media company 84.51°, will leverage Kroger’s customer data. In addition, in cases where advertisers use both Kroger and Yahoo’s platforms, they will be able to attribute store sales at Kroger locations based on media exposures from the Yahoo DSP.

Leveraging retail media network strengths

“Advertisers on average see 6.5x higher return on ad spend when using our precision audiences,” said Cara Pratt, senior vice president of Kroger Precision Marketing. “By expanding our availability through the Yahoo DSP, we’re delivering even more meaningful messages and measurable brand impact.”

That impact is something that many other retailers are currently pursuing. Their motivation stems in part from Google Chrome’s forthcoming third-party cookies deprecation.

Albertsons, Walmart, Macy’s and others have all announced major retail media network updates, launches, and partnerships in 2024. The networks bring in revenue, in addition to driving sales of products that advertisers are already selling through the networks’ owners.

Kroger Precision Marketing, which debuted in 2017, already offers self-service advertising for digital contexts. It also sells managed-service advertising in work with publishers, as well as programmatic advertising.

Kroger previously announced plans to let advertisers from another DSP, The Trade Desk, reach Precision Marketing audiences in 2023.

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TikTok Shop and the app’s influencers have become key to some online retailers’ business models. Then, in April, president Biden signed a bill that would ban TikTok in a year if Chinese parent company ByteDance doesn’t sell.

On May 7, TikTok filed a suit against the federal government over the potential ban. TikTok’s filing said that a ban would violate the U.S. Constitution.

“For the first time in history, Congress has enacted a law that subjects a single, named speech platform to a permanent, nationwide ban, and bars every American from participating in a unique online community with more than 1 billion people worldwide,” the filing from the U.S. Court of Appeals in the District of Columbia says.

Why is the US planning to ban TikTok?

Concerns about TikTok revolve around the fact that it’s owned by Chinese company ByteDance.

U.S. lawmakers who support the ban expressed concerns that the app could give the Chinese government access to private data, including location information, from TikTok’s 170 million U.S. users.

Other proponents of a ban contend that the recommendation algorithm could be used to spread misinformation or propaganda to U.S. users. 

“Congress is not acting to punish ByteDance, TikTok or any other individual company,” Senate Commerce Committee chairwoman Maria Cantwell said. “Congress is acting to prevent foreign adversaries from conducting espionage, surveillance, maligned operations, harming vulnerable Americans, our servicemen and women, and our U.S. government personnel.”

TikTok is safe for now; the bill gives ByteDance until January 2025 to sell to an approved buyer. However, ByteDance has indicated it will not sell and is now pursuing the lawsuit.

The social media company is represented by Covington and Burling LLP and Mayer Brown LLP in the suit.

TikTok’s role in ecommerce

TikTok now plays a key role in many shopping decisions. The short-form video app’s popularity, especially among young consumers, has driven sales and pushed popular products out of stock. More recently, its ecommerce platform, TikTok Shop, has grown in the U.S.

The app is essentially a shopping guide for consumers who are already primed to spend more than the average person, Ellyn Briggs, brands analyst at Morning Consult, told Digital Commerce 360. It is also a form of brand discovery for Gen Z, she said.

TikTok users are particularly prone to purchasing clothes and beauty products shown on TikTok, Briggs says.

TikTok Shop launched in the U.S. in September 2023 with more than 200,000 sellers and 100,000 creators sharing products through its affiliate program, a spokesperson stated. 

The marketplace is accessible through shoppable videos fed to users through the “for you” page. Creators can tag products in videos and live feeds that viewers can purchase directly within the app. TikTok users can buy products recommended by influencers and creators on the app, who make commissions based on sales they’ve promoted.

TikTok Shop hasn’t publicly released any total sales figures. In November alone, 5 million new customers made purchases through TikTok Shop during the marketplace’s holiday promotions, TikTok said. 

TikTok reportedly had plans to grow its ecommerce reach in the U.S. this year. A Bloomberg report found that TikTok aims to grow U.S. ecommerce sales to $17.5 billion in 2024. 

How ecommerce retailers will handle a TikTok ban

Many retailers that reach customers through TikTok are also active on other social platforms. For example, Newegg Commerce Inc. livestreams on TikTok, Facebook and YouTube.

“Newegg uses multiple popular social platforms to share content and livestream,” a spokesperson said, declining to comment further on how a ban might impact it.

Still, TikTok is a valuable customer acquisition tool.

“TikTok is a great way to get Newegg in front of people who have not shopped from Newegg before,” director of Newegg studios Drew Roder previously said. In 2023, the consumer electronics retailer told Digital Commerce 360 that TikTok streams generate the most engagement, followed by YouTube.

Newegg is No. 68 in the Top 1000. The Top 1000 database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales. 

TikTok is just one way to reach ecommerce customers

Children’s apparel retailer PatPat is attempting to build up its presence on other platforms in case TikTok gets banned.

“We value TikTok as a progressive platform for engaging with a dynamic audience and showcasing our creative content,” head of marketing Ranu Coleman said in an email. “Currently our business strategy is diversified across multiple channels — this diversification ensures that while a TikTok ban would be disappointing due to the loss of direct interaction with its community, it would not have a detrimental impact on our financial stability. We have a very flexible and agile business model, so we would shift our focus and resources as needed.”

That diversification comes in through Instagram Reels and YouTube Shorts, which Coleman says offer similar reach and engagement opportunities to TikTok. Short-form video content will remain an important part of marketing for PatPat even in a post-TikTok world, she said. Most of the influencers PatPat works with are also active on these other platforms, which would ease a transition away from TikTok, she added.

Ultimately, she believes, consumers and retailers will adapt if TikTok is banned in the U.S.

“In the discussions surrounding the potential ban of TikTok, one aspect that seems underrepresented is the adaptability and resilience of both users and businesses in the digital world,” she said. “While the focus often falls on the immediate impacts of such a ban, it’s important to acknowledge how quickly users and companies can transition and adapt to new platforms or changes.”

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The Federal Trade Commission (FTC) released a statement in late February calling the proposed Kroger-Albertsons merger “anticompetitive” and suing to block the $24.6 billion acquisition.

The revised divestiture package Kroger and Albertsons put together expands both the number of stores the companies plan to sell and non-store assets. This will better “enable C&S to operate competitively following the completion of the proposed merger,” the companies said in an April 22 statement.

“We have reached an agreement with C&S for an updated divestiture package that maintains Kroger’s commitments to customers, associates and communities, addresses concerns raised by regulators, and will further ensure that C&S can successfully operate the divested stores as they are operated today,” said Rodney McMullen, Kroger’s chairman and CEO, in the statement. “Importantly, the updated divestiture plan continues to ensure no stores will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading health care and pension benefits alongside bargained-for wages. Our proposed merger with Albertsons will bring lower prices and more choices to more customers and secure the long-term future of unionized grocery jobs.”

And if the Kroger-Albertsons merger closes, C&S will pay Kroger an all-cash consideration of approximately $2.9 billion.

Kroger ranks No. 6 in the Top 1000, Digital Commerce 360’s database of North America’s leading retailers by online sales. Furthermore, Kroger is first in the Top 1000’s Food/Beverage category. Albertsons ranks No. 24. C&S currently does not rank in the Top 1000.

Why did the FTC sue to block the Kroger-Albertsons merger?

The two grocery retailers first proposed the deal in 2022. Kroger was slated to buy Albertsons at the time, pending regulatory approval. The merger would allow the chains to create a “premier omnichannel food retailer,” Kroger said in a statement at the time. Together, the retailers would operate more than 5,000 stores across 48 states, with nearly 700,000 employees.

The suit came two days before the FTC’s Feb. 28 deadline. That’s when an agreement between the grocery retailers and the FTC not to close the deal would have expired.

The FTC’s argument is that the merger would harm consumers, as the retailers directly compete in pricing, hours, product offerings and other factors.

“If the merger takes place, grocery prices will increase, and Kroger and Albertsons’ incentive to improve product quality and customer service will decrease, further harming customers,” the FTC said in the same press release.

Kroger, Albertsons propose updated divestiture plan with C&S

The updated Kroger and Albertsons divestiture package increased the total store count to 579. That’s 144 more than the previous package’s proposed 413 stores.

The divestiture plan already included selling stores under the QFC, Mariano’s and Carrs brands to C&S. In the amended divestiture plan, Kroger and Albertsons would also sell some stores under the Haggen banner to C&S. The Haggen stores that remain under Kroger ownership “will be re-bannered into one of the retained Kroger or Albertsons Cos. banners following the close of the transaction with C&S.”

Additionally, under the amended agreement, C&S will license the Albertsons banner in California and Wyoming. It will also license the Safeway banner in Arizona and Colorado. In those four states, Kroger would re-banner the Albertsons and Safeway stores it retains after the merger closes. Kroger will also maintain the Albertsons and Safeway banners in the remaining states.

The number of stores contained in the divestiture plan by geography is as follows:

• Washington: 124 Albertsons Cos. and Kroger stores
• Arizona: 101 Albertsons Cos. stores
• Colorado: 91 Albertsons Cos. stores
• California: 63 Albertsons Cos. stores
• Oregon: 62 Albertsons Cos. and Kroger stores
• Illinois: 35 Albertsons Cos. and Kroger stores
• Texas/Louisiana: 30 Albertsons Cos. stores
• Arkansas: 18 Albertsons Cos. stores
• Nevada: 16 Albertsons Cos. stores
• Montana/Utah/Wyoming: 11 Albertsons Cos. stores
• Idaho: 10 Albertsons Cos. stores
• New Mexico: 9 Albertsons Cos. stores
• DC/Maryland/Virginia/Delaware: 9 Harris Teeter stores

Kroger will sell the above stores (regardless of banner) to C&S following the closing of the merger with Albertsons Cos.

“We are confident this expanded divestiture package will provide the stores, supporting assets and expert operators needed to ensure these stores continue to successfully serve their communities for many generations to come,” said Eric Winn, CEO of C&S, in the statement.

Non-store assets in the divestiture plan

The updated divestiture package includes increased distribution capacity, the statement said. It also includes one dairy facility. All fuel centers and pharmacies associated with the divested stores will remain with the stores and continue to operate, Kroger said.

The updated agreement maintains the sale of private-label brands:

• Debi Lilly Design
• Primo Taglio
• Open Nature
• ReadyMeals
• Waterfront Bistro

Kroger will sell all these brands to C&S, and it is adding “access to” the Signature and O Organics private-label brands.

Kroger to suspend delivery in parts of Texas, Florida

The grocery chain said it will stop offering grocery delivery in certain Texas and Florida locations beginning May 26.

Kroger announced that it opened a 60,000-square-foot automated fulfillment center in Opa-locka, Florida, in early 2023 to support ecommerce deliveries in South Florida. That followed investments from Kroger in other fulfillment centers in areas it didn’t have physical locations, including a 350,000-square-foot fulfillment center in Dallas — serving Austin, San Antonio and Oklahoma City  — which opened in 2023.

The three closures will not impact Kroger’s other automated fulfillment centers, a spokesperson previously told Digital Commerce 360.

“Kroger remains committed to growing its e-commerce offerings, delivering fresh food to more communities across the U.S.,” the statement continued.

Mary Meisenzahl contributed to this report.

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The online retailer of low-cost goods is in the early stages of considering the move, according to the report. It determined that the U.S. is unlikely to approve its IPO, pushing it to seek alternatives, per the report. 

Shein did not respond to a request for comment.

Shein is No. 2 in Digital Commerce 360’s database ranking ecommerce retailers in Asia by online sales. The online apparel retailer was valued at $66 billion in May when it closed its latest funding round. Shein reportedly reached $2.5 billion in income in 2023, according to Bloomberg.

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What obstacles does a Shein IPO face in the US?

Lawmakers have expressed concerns over the retailer’s business and labor practices that could pose a problem to IPO plans.

On Feb. 15, Sen. Marco Rubio wrote a letter to the Securities and Exchanges Commission (SEC) asking it to require additional disclosures from Shein and possibly block the IPO.

“Shein’s collaboration with Chinese regulators raises serious doubts that its IPO filings are complete and accurate. As I have written to you in the past, those very regulators order Chinese companies to deceive U.S. authorities and investors about the risks of doing business in the PRC,” he wrote.

In November 2023, U.S. Representative Jennifer Wexton released a statement questioning the presence of forced labor at Shein’s contract manufacturers.

“If the fast-fashion giant Shein wants to go public in the U.S., they should have to prove to American consumers that their products are not sourced from forced labor,” the Virginia senator said. 

The retailer has faced criticisms for labor practices since a 2022 Bloomberg report linked cotton in some Shein products to China’s Xinjiang region. Human rights groups have accused China of using forced labor from the Uyghur ethnic minority in the region, which the government in Beijing denies.

Shein has said it has a “zero-tolerance policy for forced labor.”

As of November, Shein said 1.7% of its cotton tested positive for cotton from the region.

“According to global supply chain tracing firm Oritain, these amounts are much lower than the industry average of 14%,” a spokesperson wrote at the time.

China’s investigation into Shein’s IPO

The U.S. isn’t the only government with the ability to derail Shein’s plans. 

Shein is subject to certain Chinese regulations because of its origins. The fast-fashion retailer was founded in China in 2012 but moved its headquarters to Singapore in 2022. It does not sell products in China, but it does rely on contract manufacturers in the country. The U.S. is Shein’s biggest market of the 150 countries it sells in.

Chinese companies planning an IPO outside the country must abide by recent listing rules, Reuters previously reported. The rules apply to a company if more than half of revenue, profit, or assets are generated in China, and either its main business is conducted in China, or senior management is mostly made up of Chinese citizens. 

The Chinese regulations are in part to ensure that data on Shein’s suppliers, partners, and staff in China are protected from leaks outside the country. China can also review what information Shein will share with regulators if it does go through an IPO.

Shein’s potential path forward

The U.S. remains Shein’s preferred site for an IPO, according to the Bloomberg report. The retailer is still working on its U.S. application. 

However, if that doesn’t go according to plan, Shein could also consider Singapore or Hong Kong. 

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The lawsuit, which could also include several states, is expected to be filed before Feb. 28, the report found. That’s when an agreement between the grocery retailers and the FTC not to close the deal will expire.

California attorney general Rob Bonta also told Bloomberg that an FTC complaint regarding the merger was forthcoming. He added that California will most likely join the complaint.

The two grocery retailers first proposed the deal in 2022. Kroger was slated to buy Albertsons for $24.6 billion, pending regulatory approval. The merger would allow the chains to create a “premier omnichannel food retailer,” Kroger said in a statement at the time.

Kroger is No. 8 in the Top 1000, Digital Commerce 360’s ranking of North America’s leading retailers by online sales. Albertsons ranks No. 26. The two chains also make up the first and second largest retailers in the Food & Beverage category of the Top 1000.

Kroger and Albertsons talk to the FTC

Both grocery retailers confirmed they are in talks with the FTC.

“Kroger remains in ongoing discussions with the FTC and state regulators,” a Kroger spokesperson said in a written statement. “This merger is the best thing for America’s consumers because it will lead to lower prices and more choices on the foods customers need, want and love. Blocking the combination will only embolden large, non-unionized retailers — like Walmart, Amazon and Costco — to continue opposing unions and leaving communities. Kroger will continue to lower prices, grow good-paying union jobs and increase access to fresh food for the families who need it most,” the spokesperson continued.

Albertsons shared a similar statement. The grocery retailer is “continuing to work closely with the FTC. This merger will expand competition, lower prices, protect union jobs, and enhance customers’ shopping experience,” a spokesperson said.

Other lawsuits facing the Kroger Albertsons merger

In January, Washington state attorney general Bob Ferguson filed a lawsuit in King County Superior Court in an attempt to block the deal.

Ferguson said the merger would give Kroger a near-monopoly in Washington.

“The Proposed Transaction would combine the two largest — and, in some areas, the only — supermarkets in many communities across Washington, which is likely to lead to higher prices, lower quality, and less variety in many local markets throughout Washington,” the lawsuit reads. 

Kroger and Albertsons are the two largest grocery chains in Washington. With more than 300 combined locations in the state, together they account for more than 50% of total grocery sales. 

Kroger and Albertsons previously agreed to sell 100 stores in Washington in hopes of gaining regulatory approval. That’s not enough to offset the impact of the merger on Washington consumers, the lawsuit says, calling the move “woefully inadequate.”

Then, on Feb. 14, Colorado attorney general Phil Weiser filed a lawsuit to block the deal. Weiser cited similar reasoning to Ferguson, including decreased competition in the grocery space leading to higher prices and fewer jobs. He also accused Kroger and Albertsons of making an illegal agreement not to hire the other’s employees during a 2022 strike by Kroger workers.

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State attorney general Bob Ferguson filed a lawsuit in King County Superior Court in an attempt to block the deal, The Seattle Times first reported.

The two grocery retailers first proposed the deal in 2022. Kroger was slated to buy Albertsons for $24.6 billion, pending regulatory approval. The merger would allow the chains to create a “premier omnichannel food retailer,” Kroger said in a statement at the time.

Kroger is No. 8 in the Top 1000, Digital Commerce 360’s ranking of North America’s leading retailers by online sales. Albertsons ranks No. 26. The two chains also make up the first and second largest retailers in the food and beverage category of the Top 1000.

Why is the attorney general suing to stop the merger?

Ferguson says the merger would give Kroger a near-monopoly in Washington.

“The Proposed Transaction would combine the two largest — and, in some areas, the only — supermarkets in many communities across Washington, which is likely to lead to higher prices, lower quality, and less variety in many local markets throughout Washington,” the lawsuit reads. 

Kroger and Albertsons are the two largest grocery chains in Washington. With more than 300 combined locations in the state, together they account for more than 50% of total grocery sales. 

“This merger is bad for Washington shoppers and workers,” Ferguson said. “Free enterprise is built on companies competing, and that competition benefits consumers. Shoppers will have fewer choices and less competition, and, without a competitive marketplace, they will pay higher prices at the grocery store. That’s not right, and this lawsuit seeks to stop this harmful merger.”

Kroger and Albertsons previously agreed to sell 100 stores in Washington in hopes of gaining regulatory approval. That’s not enough to offset the impact of the merger on Washington consumers, the lawsuit says, calling the move “woefully inadequate.”

Kroger and Albertsons respond to the lawsuit

The two retailers released a joint statement regarding the lawsuit.

“We are disappointed in Attorney General Ferguson’s premature decision to file a lawsuit while the merger is still under regulatory review. We remain in active and ongoing dialogue with the FTC and the other state Attorneys General,” they said in an emailed statement.

“The merging parties will vigorously defend this in court because we care deeply about our customers and the communities we serve, and this merger will result in the best outcomes for Washington consumers,” the statement continues. Kroger CEO Roger McMullen previously promised to fight for the merger in court if necessary.  

“Blocking this merger would only serve to strengthen larger, non-unionized retailers like Walmart, Costco and Amazon, by allowing them to maintain and increase their overwhelming and growing dominance of the grocery industry. In contrast, Kroger and Albertsons Companies merging will bring lower prices to more customers, strengthen and create good-paying union jobs, and bring more fresh, affordable food to more communities” Kroger and Albertsons said.

Amazon, Walmart and Costco and rank No. 1, No. 2, and No. 6, respectively, in the Top 1000. Digital Commerce 360 categorizes them as mass merchants, rather than food and beverage retailers.

Workers at Kroger and Albertsons are unionized with The United Food and Commercial Workers International Union (UFCW). The UFCW voted in May to oppose the merger.

The state of online grocery sales

U.S. online grocery sales declined slightly in 2023, according to annualized results from the monthly Brick Meets Click/Mercatus Grocery Shopper Survey. Sales totaled $95.8 billion, $97.0 billion in 2022 and $97.6 billion in 2021.

Meanwhile, Kroger and Albertsons both grew digital sales in their most recent fiscal quarters. Kroger grew online sales 11% year over year in its third quarter ended Nov. 4, 2023. Albertsons grew its online sales 19% in its second quarter ended Sept. 9.

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