Kroger Albertsons merger
Facing a drop in sales and a failed merger with Albertsons, Kroger is closing 60 underperforming stores by 2026. The move, which risks over 1,000 corporate and in-store jobs, is part of a cost-cutting effort. X / Pop Base @PopBase

In a significant shift for the grocery industry, Kroger has announced that it will close 60 of its underperforming stores by 2026.

This strategic shift follows the termination of its proposed merger with Albertsons, putting more than 1,000 jobs at risk and signalling a new direction for the retail giant.

A Shift in Strategy: The Cost of a Cancelled Deal

The company's previous assurance not to lay off staff is being reversed, as Kroger announced job cuts for nearly 1,000 corporate employees. This news follows the grocer's earlier decision to close over 60 of its underperforming stores by the end of 2026.

Following the unsuccessful $25 billion (£18.61 billion) merger with Albertsons, Kroger initiated closures as a means to reduce costs. 'These decisions are never easy, but we know thoughtful, yet difficult, choices are necessary to set our organisation up for continued success', said interim chief executive officer Ron Sargent.

He also mentioned that Kroger plans to grow and reinvest 'those savings in areas that drive its strategy and directly benefits customers'.

Leadership Change and New Priorities

Having taken over from Rodney McMullen, who left due to 'personal conduct', Sargent confirmed that the company is reviewing its priorities and stopping any projects that were not beneficial to the business.

As of February, Kroger's workforce consisted of more than 409,000 people, with the majority working in its stores. Employees at the locations scheduled for closure will be given the chance to take up positions at other nearby stores.

Kroger, which operates nearly 2,800 stores nationwide, experienced a decline in sales for the first quarter of this year, dropping to $45.1 billion (£33.58 billion) from $45.3 billion (£33.73 billion) earned in the same period last year.

The company's net income also decreased to $866 million (£644.78 million), down from $962 million (£716.26 million). Even with these slight setbacks, Kroger expressed satisfaction with the outcome.

'Kroger delivered solid first quarter results, with strong sales led by pharmacy, eCommerce and fresh', said Sargent.

'We made good progress in streamlining our priorities, enhancing customer focus, and running great stores to improve the shopping experience.'

Stores Close, But Expansion Continues

Even with the planned closures, Kroger intends to allocate between $3.6 billion (£2.68 billion) and $3.8 billion (£2.83 billion) this year for capital projects, including the construction and renovation of new stores.

The company plans to launch approximately 30 new stores by the end of 2025, with a focus on markets that show stronger performance and potential for growth.

'New store openings are the biggest driver of market share gains, and we're continuing to look at that', Sargent said. 'And I think we'll be investing to accelerate store openings going forward'.

Kroger has already implemented several changes to improve the company, including closing its e-commerce platform, Kroger Ship. The service, which began in 2018, was unable to compete with companies like Walmart and Amazon.

Digital Deals and Shelf Labels Stir Shoppers

The chain was in the news last month for giving customers access to Weekly Digital Deals through flyers in its stores. These flyers, available in nearly all locations, enable loyal shoppers to download all the offers directly to their mobile devices.

Shoppers recently created a stir on social media after spotting an increase in electronic shelf labels at Kroger. The company confirmed to The Daily Mail that these labels are not used for dynamic pricing.

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