Grocery store chain Kroger announced it will lay off 3,000 employees over the next three years to step up its use of artificial intelligence to streamline operations.
“Technology is reshaping what’s possible,” CEO Greg Foran wrote in a memo to employees Monday. “The way work is done is changing across all industries; we must adapt and leverage technology. We must embrace capabilities, reduce duplicate work, and look closely at where work is best suited.”
Kroger last month outlined its AI strategy, intended to “enhance the customer experience, make associates’ jobs easier, and deliver better business results.”
Cincinnati-based Kroger is the largest independent supermarket chain in the United States, with 409,000 employees and more than 2,700 stores operating under various brands, including Ralphs, King Soopers, Smith’s and Fred Meyer.
Kroger named former Foran, director of Walmart CEO in February, 11 months after the sudden resignation of its previous CEO.
Foran has a reputation for being tech-savvy and detail-oriented. He led Walmart’s U.S. division from 2014 to 2019, where he focused on cleaning stores, ensuring items were in stock and improving the fresh produce selection. It also introduced online ordering and pickup and accelerated Walmart’s digital capabilities.
Walmart has become a bigger challenge for Kroger and other traditional grocers, as Americans increasingly pick up their groceries along with other general products sold by Walmart.
Kroger has also felt pressure from fast-growing discount chains like Aldi and Lidl and online giants like Amazon.
Kroger proposed a merger with Albertsons in 2022 to better compete with rivals. But the Federal Trade Commission and two states – Washington And Colorado — sued to block the merger in 2024, saying it would raise prices and reduce workers’ wages by eliminating competition. The judges ultimately ruled that the merger should not take place.
A day after their merger fell through, Albertsons filed a lawsuit against Kroger, seeking a $600 million termination fee as well as billions of dollars in legal fees and a loss of shareholder value.
Kroger said the claims were “baseless” and that Albertsons was not entitled to the fees.
Albertsons faces the same competitive challenges as Kroger and other grocery chains, as customers turn to cheaper alternatives and faster delivery from larger retailers.
During her second-quarter earnings conference call with investors on Tuesday, CEO Susan Morris hinted at further cost cuts and a streamlining of the company’s structure, including layoffs.
“We’ve worked over the last year and seen a substantial reduction in staff numbers, but frankly there’s still a lot of work to be done,” Morris said. “And you’ll see us take aggressive action there in the next 12 to 18 months as well.”
Kroger shares fell 2.2% Tuesday afternoon, to $61.21. Albertsons is up 2.8% but its shares are down more than 25% this year.
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