Kroger’s major store-restructuring programme is gathering pace, with 39 stores closed across nine banners as the US supermarket giant moves towards its target of approximately 60 closures.
The programme focuses on underperforming locations and forms part of a broader effort to improve the economics of Kroger’s store network. The company announced plans to close 60 stores over an 18-month period.
The closures are spread across different Kroger-owned supermarket banners rather than being limited to stores carrying the Kroger name.
The restructuring comes after the collapse of Kroger’s proposed $24.6 billion acquisition of Albertsons, which was blocked by US courts.
Kroger is now operating without the scale advantages that would have come from combining the two supermarket groups and is instead concentrating on improving its existing estate.
Store closures are becoming an increasingly important part of US grocery retail strategy. Supermarkets are facing higher labour, property and operating costs while consumers remain highly price sensitive.
For Kroger, closing stores that are unable to generate acceptable returns is intended to allow resources to be redirected towards stronger locations and other parts of the business.
ISN view: Kroger’s programme illustrates a broader trend in American grocery retail. The number of stores is becoming less important than the productivity of each location. Supermarket groups are increasingly prepared to close underperforming stores while investing in locations that can deliver stronger sales and better margins.