Dive Brief:
- Kroger will continue investing in AI as tools enable better product visibility and productivity, leading to reduced inventory loss or shrink and improved talent retention, executives said during the grocer’s Q1 earnings call in June.
- “We’ve seen good progress [around shrink],” SVP and CFO David Kennerley said during the call. “What we really attribute this to is we’ve made some investments in some AI-enabled technology and deployed new processes around that technology.”
- The company also launched a virtual AI assistant for its associates, which it partly credited for record levels of store and company retention during the quarter. “When our associates stay longer, they learn more, take on additional responsibilities and deliver a better customer experience, which leads to better sales,” said interim CEO Ron Sargent.
Dive Insight:
Kroger is doubling down on AI while keeping savings top of mind, joining a cost-conscious group of businesses making similar moves.
The grocer will close 60 underperforming stores by the end of next year as it reassesses capital allocation and “aggressively” finds ways to reduce costs throughout the company, according to the earnings call.
Kroger sees AI and other technologies as part of the solution, too.
“The other thing that will also contribute towards better cost performance is what I call ways of working and process improvement,” Kennerley said. “There’s a lot of opportunity here to work smarter, more efficiently, more tech-enabled, and we’ve already got some good proof points on that.”
Excluding fuel, identical-store sales ticked up 3.2% during Q1 2025, which ended May 24, compared with the same period last year. Kroger characterizes a store as identical if it operates without expansion or relocation for five full quarters.
Kroger’s once-sought-after merger partner, Albertsons, has similarly sharpened its technology focus while eyeing cost-saving measures.
“Our North Star is to use technology in everything that we do,” Albertsons CEO Susan Morris said during the company’s Q4 2024 earnings report in April.
As part of the strategy, the Idaho-headquartered grocer plans to increase AI use to enhance product quality and monitoring for freshness as it looks to drive higher sales and better customer experiences.
The efforts also align with Albertsons’ three-year plan to cut $1.5 billion in costs that rolled out after the merger failed.
