Over the past few months, Kroger has seen a slight decrease in consumer demand amid recent economic uncertainty and heightened competition.
During the third quarter of this year, Kroger saw its identical sales (without fuel) increase by 2.6% year over year, according to its latest earnings report.
However, recent data from market research company Numerator, which was shared with TheStreet, revealed that Kroger captured 8.5% of grocery market share during the quarter, a slight decrease from the 8.8% it had during the same period in 2024.
According to Numerator, Walmart is the number one grocery retailer by dollar share, while Kroger has the number two spot. Costco falls behind Kroger; however, the warehouse club is gaining steam among consumers as it managed to increase its market share to 8.2% during the quarter, up from the 8% it had during the third quarter last year.
As Kroger battles for consumer dollars amid growing competition, it suffered a $1.3 billion loss during the third quarter, after its general, operating and administrative expenses spiked by 44%.
Kroger is facing increased competition as it tries to attract price-conscious customers.Jennifer G. Lang / Shutterstock
During an earnings call on Dec. 4, Kroger interim CEO Ronald Sargent warned that consumer sentiment has declined in recent months due to concerns over inflation, the slowing job market, and other factors, which are causing shoppers to continue pulling back their spending, especially when it comes to discretionary purchases.
“I just think customers are managing their budgets carefully,” said Sargent. “And they’re making more trips. They’re making smaller trips. The idea of stocking up is declining a bit. And we’re seeing this economy where high-income premium shoppers, they continue to spend, while lower-income customers are pulling back more aggressively.”
He said that middle-income consumers are increasingly looking for value, and flagged that sales during the latter half of the third quarter slowed due to the pause on SNAP benefits, which quickly resumed after the government shutdown concluded last month.
“Going forward, I think the consumer is going to remain cautious,” said Sargent. “I think there’s going to be more focus on food items and less on discretionary categories.”
In November, consumer sentiment dropped significantly as concerns about the economy intensified, particularly during the government shutdown, which lasted from Oct. 1 to Nov. 12.
In November, consumer sentiment declined by almost 5% from October.
Specifically, sentiment regarding current personal finances and buying conditions for durable goods decreased by10% .
Also, year-ahead inflation expectations (which measure how much consumers expect prices to increase) only decreased from 4.6% in October to 4.5% in November. Source: University of Michigan
“After the federal shutdown ended, sentiment lifted slightly from its mid-month reading,” said University of Michigan Surveys of Consumers Director Joanne Hsu in a statement. “However, consumers remain frustrated about the persistence of high prices and weakening incomes.”
Amid declining consumer sentiment, Kroger has doubled down on attracting customers by expanding store hours and improving checkout speeds, service, and in-stock levels.
“These investments are delivering tangible results, including significant year-over-year reductions in wait times for our customers,” said Sargent.
Kroger also expanded its relationships with third-party delivery providers Instacart, DoorDash, and Uber Eats to improve grocery delivery speeds.
“Orders delivered within two hours or less grew by more than 30%, reflecting the growing immediacy demand,” said Kroger Chief Financial Officer David Kennerley during the earnings call.
The grocery chain also lowered prices on over 1,000 items during the third quarter and plans to continue ramping up promotions during the holidays to help boost sales.
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However, in order to keep lowering prices in stores, Kroger is relying on several bold cost-cutting efforts. For example, in August, Kroger announced its plans to cut almost 1,000 corporate jobs to “simplify” its organization.
It also announced the closures of three automated fulfillment centers that haven’t met operational and financial expectations, which will shut down by the end of January 2026.
In addition, Kroger unveiled plans in June to close roughly 60 underperforming stores across the U.S. over the next 18 months.
During a recent interview with The Wall Street Journal, Sargent said savings from these cost-cutting decisions will not only help to lower prices in stores, but also keep bakeries, delis, and other store services open longer.
“That would be a good example of taking money out of one part of the business and putting it closer to the customer,” said Sargent in the interview.
Kroger’s increased focus on making its prices more affordable for customers in stores comes as more Americans are changing the way they shop, due to worries about rising grocery prices, according to a recent survey from LendingTree.
Approximately 61% of Americans have cited stress over paying for groceries.
Also, 88% have adjusted their grocery shopping habits as they face higher costs.
Specifically, 44% said they’re buying more generic brands, 38% are sticking to their shopping lists, and 29% are paying closer attention to prices. Source: LendingTree
“It’s understandable to feel powerless in the face of sky-high prices and interest rates, but there are things you can do to make a difference,” said Matt Schulz, LendingTree chief consumer finance analyst, in the survey. “Shopping around pays dividends. Using a rewards credit card can put money back in your pocket and help extend your budget.”
“Using a 0% APR credit card or low-interest personal loan to consolidate debt and get lower interest rates can free up money that can be put toward other goals,” said Shulz. “You can supercharge your emergency fund with a high-yield savings account.”
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