Kroger CEO sounds alarm on unexpected customer behavior originally appeared on TheStreet.
Kroger (KR) appears to be resonating well with consumers, despite recent inflation and growing concerns about tariffs increasing prices. However, the grocery chain is noticing drastic changes in customer behavior.
In Kroger’s first-quarter earnings report for 2025, it revealed that its identical sales without fuel increased by 3.2% year-over-year during the quarter.
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The increase in sales contributed to it generating an operating profit of $1.3 billion, which is about 2% higher than what it earned during the same time period last year.
Related: Kroger announces big store change amid price gouging accusations
Also, recent data from Placer.ai found that customer visits to Kroger stores increased year-over-year in January but were slightly down in February.
During an earnings call on June 20, Kroger CEO Ron Sargent said the company had “strong sales” in pharmacy, e-commerce, and fresh food categories. He said fresh food sales, in particular, were “better than center store sales,” which signals that more customers are prioritizing consuming healthier foods.
“Simple Truth and private selection led our sales growth, highlighting that customers want premium products while also spending less,” said Sargent. “Our Brands is also creating new products that support customers’ healthier eating habits. For example, earlier this year, we identified protein as a major customer trend, and soon, Simple Truth will introduce 80 new protein products to our assortment.”
New Simple Truth protein products will include bars, powders, and shakes. Sargent attributed the higher interest in protein products to customers using GLP-1 medications such as Ozempic and Wegovy for weight loss.
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The trend also comes after a survey conducted by the International Food Information Council last year found that 79% of Americans consider whether a food product is processed when deciding to purchase it. Also, 63% of Americans avoid processed foods, while more than half follow a vegan, vegetarian, or plant-based diet to be healthier.
While more customers are eating healthier, Sargent flagged that shoppers are also focused on reducing their spending amid inflation.
“Customers continue to spend cautiously in an uncertain economic environment,” said Sargent. “Many customers want more value, and as a result, they’re buying more promotional products and more Our Brands products. They’re also eating more meals at home.”
He said that even though Kroger has lowered prices on more than 2,000 products this year, customers are continuing to scale back discretionary spending in several categories and are relying more on coupons to save money.
“We are kind of seeing a shift into larger pack sizes and increased use of coupons,” he said. “We’re seeing some discretionary spend that’s a little softer in areas like snacks and adult beverages, pet, general merchandise categories. So, you know, I think in terms of the consumer, we expect the consumer to remain cautious throughout the year. And we’re responding to that with simpler promotions, coupons, lower prices, and a lot of own brand choices.”
As consumers change their shopping habits, Kroger has announced plans to close 60 low-performing stores nationwide over the next 18 months.
“We don’t take these decisions lightly, but this will make the company more efficient, and Kroger will offer roles in other stores to all associates currently employed at affected stores,” said Sargent during the call. “To recap, our top priorities are clear. We’re going to move with speed. We’re gonna concentrate on our core business, and we’re gonna run great stores. This is how we’ll position Kroger for long-term performance.”
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Despite its plans to close 60 stores, Kroger will be opening new stores this year in competitive areas and cities where it operates.
“We’ll be investing to accelerate store openings going forward,” said Sargent. “We don’t have a number to share with you this morning, but it’ll be north of the 30 that we open this year.”
Sargent also said that new store openings will be “scattered around the country, and there’ll be a variety of store formats,” with many being marketplace stores.
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Kroger CEO sounds alarm on unexpected customer behavior first appeared on TheStreet on Jun 23, 2025
This story was originally reported by TheStreet on Jun 23, 2025, where it first appeared.
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