Kroger Sees Uptick in Sales
Kroger saw sales tick up in its second quarter as shoppers continued to cautiously spend.
The grocery giant released earnings Thursday (Sept. 11) showing a 3.4% increase in sales, compared to 1.2% during the same quarter last year. Speaking during an earnings call, interim CEO Ron Sargent said this trend is happening as consumers are eating at home more often.
“But I think at the same time, customers are feeling pretty stressed about the economy. They’re doing things to save money,” he told analysts. “And when you look at income cohorts, low and middle income households are really looking for deals. They’re using coupons more. They’re making a smaller, but more frequent trips and they’re buying more private-label products.”
Higher income households, meanwhile are concerned about food prices but are still spending and splurging on premium products and purchasing larger pack sizes. In both groups, there’s less discretionary spending and declines in categories like snacks and adult beverages, leading the company to expect continued consumer caution.
“Consumer sentiment continues to be low historically and customers continue to be sensitive about food pricing,” Sergeant said. “I think it’s a kind of a bit of a tale of two cities.”
Research by PYMNTS Intelligence has found that higher income households aren’t immune to economic struggles these days.
A recent PYMNTS Intelligence report examines how millions of higher-earning Americans have gone from a planning mindset to a reactive mindset. That means they are now juggling bills as they pop up, while frequently depending on credit. More than half of all individuals in households that make more than $100,000 are now reactors, up 25% since February of last year.
Also Thursday, Sargent said Kroger was carrying out a “full site-by-site analysis” of its automated order-fulfilment network as it works to improve store-level fulfillment.
“We are seeing a clear trend of customers opting for faster delivery times, an area where we are well positioned based on our conveniently located store network, coupled with our delivery partner, Instacart,” the executive said.
During this quarter, Kroger’s eCommerce sales increased by 16%, with delivery orders outpacing pickups for the first time.
Meanwhile, David Kennerly, Kroger’s chief financial officer, said the chain has not seen a material impact from tariffs on overseas goods. He went on to say that the company’s strategy still involves raising prices “as a last resort, to ensure that we keep prices as low as possible for our customers.”
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