Kroger's Price Battle Is a Multiyear Program, CEO Says

Kroger CEO Greg Foran calls reducing cost "not a quarter or even a yearlong process" — it is a multiyear program, and the retailer is already seeing early results.

Foran made the comments during Kroger's latest earnings call last week, according to a transcript provided by AlphaSense. He repeatedly referenced the company's aspiration to become America's favorite grocer.

The first proof points came in the second quarter. On-shelf availability reached an all-time high, and pickup orders were the best ever, Foran said.

Sourcing and savings also came in ahead of plan in the second quarter. Foran said Kroger is not chasing new ideas; the focus is on strong execution in in-stocks, merchandising, standards and shrink management so customers notice the difference. He acknowledged that more work remains across sourcing, procurement, productivity and simplification.

"Every dollar we take out is a dollar we can reinvest in areas customers will see," Foran said. "That is how this business becomes sustainable for customers and for shareholders."

Kroger expects savings to build through the balance of the year, giving the retailer more ways to pass those savings on to customers. The savings come from a combination of cost of goods sold, imports, goods not for resale, reductions and headcount in the business. Foran said the retailer must become more efficient so it can apply those savings to shelf prices and develop a promotional mix that makes sense.

"So this gets done by geography," Foran said. "We're well underway. We're encouraged actually by the results that we're getting."

Kroger is also deepening its connection with customers. The grocer continues to see strong engagement in natural and organic products and has responded by adding more than 600 new natural and organic items.

The retailer is also finding new ways to make health and wellness more accessible and convenient. In August, Kroger launched a new grocery and prescription delivery offering with Instacart.

"It's another example of how we're using the strength of our ecosystem to reduce friction and improve service," Foran said.

Pricing is showing early movement as well. Foran noted that Kroger's pricing relative to some competitors on white label products has improved over the last quarter.

For vendors and retail partners, the message is clear: Kroger's cost-reduction and price-investment agenda will unfold over multiple years, geography by geography, with reinvestment aimed squarely at what shoppers see on the shelf.