Kroger CEO has a harsh solution to rising prices in stores
Over the past few months, Kroger has seen a slight decline in consumer demand due to recent economic uncertainty and increased competition.
In the third quarter of this year, Kroger saw its same sales (non-fuel) increase 2.6% year over year. latest earnings report.
But the latest data from the market research company ShareShared with TheStreet, it was revealed that Kroger took over 8.5% of the grocery store market share quarter, a slight decrease from 8.8% in the same period in 2024.
According to Numerator, Walmart is the number one grocery retailer in terms of dollar share, while Kroger is in second place. costco It lags behind Kroger; however, warehouse club It is gaining strength among consumers by managing to increase its market share from 8% in the third quarter of last year to 8.2% this quarter.
Kroger swung to a $1.3 billion loss in the third quarter after general, operating and administrative expenses rose 44% as it struggled for consumer dollars amid increased competition.
Kroger faces increasing competition as it tries to attract price-conscious customersJennifer G. Lang / Shutterstock
during a earnings call On December 4, Kroger’s interim CEO Ronald Sargent warned that consumer sentiment had fallen in recent months due to concerns. inflationa slowing job market and other factors causing shoppers to continue to pull back on spending, especially when it comes to discretionary purchases.
“I think clients are managing their budgets carefully,” Sargent said. “And they’re taking more trips. They’re taking smaller trips. The idea of stockpiling is diminishing a little bit. And we’re seeing an economy where higher-income premium consumers continue to spend, while lower-income customers are pulling back more aggressively.”
He said middle-income consumers are increasingly looking for value and noted that sales slowed in the second half of the third quarter because of a pause in SNAP benefits, which quickly resumed after the government shutdown ended last month.
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“Going forward, I think the consumer will remain cautious,” Sargent said. “I think there will be more focus on groceries and less focus on discretionary categories.”
Consumer confidence fell significantly in November as concerns about the economy intensified, particularly during the government shutdown that lasted from October 1 to November 12.
Consumer confidence in November rejected with almost 5% Starting from October.
In particular, sensitivity to current personal finance and durable goods purchasing conditions decreased by10% .
Additionally, year-ahead inflation expectations (which measure how much consumers expect prices to rise) are only decreased from 4.6% in october 4.5% In November. Source: University of Michigan
“Sentiment rose slightly from mid-month readings after the federal shutdown ended,” said Joanne Hsu, director of consumer research at the University of Michigan. expression. “But consumers continue to be frustrated by continued high prices and weakening incomes.”
In an environment of declining consumer sentiment, Kroger has doubled down on attracting customers by expanding store hours and improving checkout speeds, service and inventory levels.
“These investments are delivering tangible results, including significant year-over-year reductions in wait times for our customers,” Sargent said.
Kroger also expanded its relationships with third-party delivery providers Instacart, DoorDash and Uber Eats to increase grocery delivery speeds.
“Orders delivered in two hours or less are up more than 30%, reflecting increased demand for urgency,” said Kroger Chief Financial Officer David Kennerley. earnings call.
The grocery chain also cut prices on more than 1,000 items in the third quarter and plans to continue increasing promotions during the holidays to help boost sales.
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But to continue lowering prices in stores, Kroger is relying on a few bold cost-cutting efforts. In August, for example, Kroger announced its plans. almost 1,000 corporate layoffs “simplifying” its organization.
At the same time announced the closures It is one of three automated fulfillment centers that do not meet operational and financial expectations to be closed by the end of January 2026.
Also Kroger’s Announced plans for June Closing approximately 60 underperforming stores across the U.S. over the next 18 months.
during a Recent interview with The Wall Street JournalSavings from these cost-cutting decisions will not only help lower prices in stores, Sargent said, but will also help bakeries, delis and other store services stay open longer.
“This might be a good example of taking money out of part of the business and moving it closer to the customer,” Sargent said in the interview.
Kroger’s increased focus on making its prices more affordable for customers in stores comes as more Americans are changing the way they shop due to concerns about rising grocery prices. New survey from LendingTree.
Approximately 61% of Americans expressed stress over paying for groceries.
Moreover, 88% to have adjusted their grocery shopping habits because they face higher costs.
Especially, 44% They said they were buying more generic brands, 38% they stick to their shopping lists and 29% We pay more attention to prices. Source: LendingTree
“It’s understandable to feel powerless in the face of high prices and interest rates, but there are things you can do to make a difference,” said Matt Schulz, LendingTree’s chief consumer finance analyst. questionnaire. “Shopping saves money dividends. “Using a rewards credit card can put money back in your pocket and help you stretch your budget.”
“Using a 0% APR credit card or low-interest personal loan to consolidate debt and get lower interest rates can free up money that can be transferred to other goals,” Shulz said. “You can bolster your emergency fund with a high-yield savings account.”
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