Good news, Kroger shoppers: groceries are going to get cheaper. Kroger found the money. It was in the paychecks of 3,000 people at corporate.
That's the plan in a memo from CEO Greg Foran: cut 3,000 roles over three years, a little over a third of the corporate staff, and put the savings toward lower prices. Kroger calls it simplifying. The people being simplified will find out who they are sometime in the next few months, which should make for a relaxing holiday season at the office.
A short glossary
Corporate memos are written in their own language. Here's a translation.
Simplifying: fewer people.
Overhead: the people below whoever is writing the memo.
Layers: also people, stacked.
Broader roles: you do your job and the job of the person who used to sit next to you, for the same paycheck.
Investing in our associates: having 3,000 fewer of them.
The memo also talks up Kroger's new AI agents, which will "surface only the most important information." Kroger hasn't said the AI is taking anyone's job. It's just teaching staff to use it in the same year it's cutting a third of the office. Probably a coincidence.
The package
Kroger hired Foran in February on a pay package worth upwards of $17 million a year. That includes $250,000 a year toward his housing, health and taxes, plus five weeks of paid vacation.
So Kroger can help one man with his housing, and 3,000 people can help themselves. And five weeks off is generous, but 3,000 of his employees are about to get a lot more time off than that.
The breakup
Part of what Kroger is cleaning up is a breakup. It tried to buy Albertsons for $25 billion, regulators said no, and now Albertsons wants more than $9 billion from Kroger for the trouble. That's getting dumped and then billed for dinner.
None of the 3,000 people losing their jobs got down on one knee for Albertsons. They're just the ones picking up the check.
Lapping the midfield
Kroger told investors its shoppers are struggling: SNAP benefits got cut, gas costs more and nobody's feeling great. So the company's problem is that people can't afford groceries, and its fix creates 3,000 more people who can't afford groceries.
Foran likes to say running Kroger is "a bit like a Formula One race," and he wants to get out of the midfield and catch Walmart and Costco. In Formula One you make a car faster by making it lighter. Kroger took a long look at the car and decided the heavy part was the pit crew, not the $17 million driver.
"The basket has to come down," he told Bloomberg. "And not everyone's basket is the same." He's right. Some baskets are shrinking because SNAP got cut. Some are about to shrink because a paycheck got simplified. His comes with a housing allowance.
The small type
We're all for cheaper groceries, and if prices really do drop for families who just lost SNAP money, good. But this is Kroger's second round of simplifying in a little over a year. Last August it cut nearly 1,000 corporate jobs and called it the same thing.
Keep it up and Kroger will eventually be one very well-paid CEO and a self-checkout.
