Dive Brief:
- Kroger will fuel modernization with AI as it deploys use cases to operate more efficiently, improve customer experience and boost sales, executives said during the grocer’s Q2 2025 earnings call Thursday.
- “Accelerating our AI efforts is a natural step for Kroger, given our long history of leadership in data and machine learning,” Chairman and interim CEO Ron Sargent said Thursday. “Where we've implemented AI in different parts of the organization, we're seeing results with more competitive pricing, shrink improvements and faster fulfillment.”
- Cost optimization and operational efficiencies are top priorities for the grocer as it looks to move forward from its failed merger with Albertsons. Same-store sales excluding fuel rose 3.4% during the second quarter, the sixth consecutive quarter of increase for this metric. The company also raised its identical sales growth forecast for the 2025 fiscal year.
Dive Insight:
Grocers, like other retailers, have increased their appetite for emerging technologies as leaders look to alleviate the effects of economic headwinds and add a competitive edge.
In April, Albertsons executives said the company was strengthening its data capabilities in pursuit of AI adoption. Walmart and Instacart have also worked to scale AI capabilities.
Kroger credits its “couple decades worth” of loyalty program data, a “deep bench of data science capability" and its 84.51° division for laying the foundation for its AI efforts, EVP and CFO David Kennerley said during the call Thursday.
Despite the focus on modernization, Kroger has reduced staff in related departments. In August, workers in Kroger’s Technology and Digital division were impacted. The company also laid off employees in 84.51°, the grocer’s retail analytics subsidiary, in March. The reduction in staff was an effort to “focus on the key priorities that power our go-to-market strategy,” a spokesperson told Grocery Dive.
Looking forward, Kroger plans to examine “all aspects” of its business to drive efficiencies, including a site-by-site analysis of its automated fulfillment network, Sargent said during the latest earnings call.
“We expect to share an update on our strategic review during the third quarter,” Sargent said. “We're confident that the outcome of our work will lead to both stronger [e-commerce] capabilities and a clear path toward profitability.”
