Kroger CEO Rodney McMullen said Monday that the company has been working with its manufacturers on how they can work together to reduce costs as its customers continue to be under financial strain.
“About half of our customers are very financially burdened … their wages are not keeping up with the inflation they’ve been experiencing,” McMullen said during a keynote session at NRF 2023: Retail’s Big Show in New York. On Monday.
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McMullen said the company is always thinking about how to make things affordable and accessible for its customers, especially as they remain under pressure from inflation, which he predicts will moderate or decrease by the end of the year.
“Our expectation is that towards the end of the year you start to see fairly moderate inflation or flat inflation,” McMullen said. “Now we don’t see a big deflation yet.”
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When the next batch of chickens comes in and lays eggs, “you should start to see some deflation in a few categories, but not much.”
Egg prices have risen significantly in recent months as a result of an outbreak of bird flu, coupled with higher prices for feed, fuel and labour.
While inflation eased to 6.5% in December from a year earlier, the sixth consecutive annual slowdown, it was still about three times the pre-pandemic average, underscoring the ongoing financial burden on shoppers.
McMullen reiterated Monday that its merger with Albertsons will help cut costs and lower prices for shoppers.
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McMullen said the merger with Albertsons would “create a tremendous amount of synergies.”
In October, the company said it plans to reinvest $500 million in cost savings from synergies to lower prices for customers.
“Every store we stock, we know we’re going to start lowering prices from day one,” McMullen said during the NRF 2023 keynote.
McMullen said the company has reduced prices by more than $5 billion annually since 2006.
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“If you do what’s right for the customer, you do what’s right for partners, and you support your communities, shareholders benefit from that,” he said.
Meanwhile, the company says it has relied on electric coupons to help customers stretch their budgets.
But it also saw its own brands “gain significant market share” in some areas, according to McMullen.
“What we’re finding is that customers switched to our brands initially to save money … when they switch, they stay with us even when their budgets are a little bit tighter,” he said.
FOX Business’ Megan Henney and The Associated Press contributed to this report.