“Our company has more layers, more handoffs and more overhead than we need, so we are addressing this issue.”
Kroger chief executive Greg Foran wrote this in a memo to staff on Monday, 12 October. The US supermarket chain will cut about 3,000 corporate roles over the next three years. It is leaning on technology to simplify how it works. Kroger shared the memo with Business Insider.
The cuts amount to about 37% of Kroger’s 8,200 corporate employees, the company told Business Insider. Decisions about which roles go will start being communicated “in the coming months”, Foran wrote.
‘Technology is reshaping what’s possible’
Foran gave two reasons for the cuts. The first is simplification, with faster decisions and resources moved to where they matter most. The second is technology.
“Technology is reshaping what’s possible. The way work gets done is changing across every industry; we must adapt and take advantage of technology,” Foran wrote.
The cuts will let Kroger keep investing in its frontline workers, he said. They will also move resources closer to customers to lower prices.
The memo does not say how many roles AI will replace. Kroger set out its AI strategy in September. It includes tools that forecast demand and personalise savings, Fortune reported. Others help customers plan meals and build carts around their budgets. Kroger is also building AI agents to help store teams prioritise daily tasks. It offers AI training to more than 400,000 employees.
A former Walmart boss takes on Walmart
Kroger is the largest standalone supermarket chain in the US, the Associated Press reported. It has 409,000 employees and more than 2,700 stores. Its banners include Ralphs, King Soopers, Smith’s and Fred Meyer.
Foran became chief executive in February. He ran Walmart’s US business from 2014 to 2019. Kroger now competes with Walmart, Aldi and Lidl for the same shoppers. Walmart is adding tech to its own stores too, such as light-up shelf labels.
Kroger is not alone in cutting roles as it adopts AI. HubSpot plans to cut 660 jobs as it pivots to AI, and Amazon reportedly cut retail jobs this month.
‘Only cents off’ the basket
Neil Saunders, a retail analyst who has tracked Kroger’s turnaround under Foran, told Fortune that shoppers may see modest savings.
“If spread across various products this kind of investment would take only cents off the price of an average basket,” Saunders said.
The effect could be bigger if Kroger focuses the savings on products where price matters most. He expects it to do that. He also said not every cut is down to automation.
“There is a degree to which Kroger’s corporate structure was bloated and inefficient, so some of these cuts would have happened regardless of any technological innovation,” Saunders said.
Kroger shares fell 2.2% to $61.21 in afternoon trading on Tuesday, the Associated Press reported.