In brief: Kroger will put $5 billion into lower prices by 2029, paid for by cost savings, including more goods bought straight from growers, and by cutting complex promotions.
Implications:
Middlemen: If you import or broker produce for Kroger, some of that volume may move to direct deals with growers.
Cost increases: Expect harder pushback on price increases, because Kroger’s price cuts depend on its purchasing savings.
Grapes: Kroger already buys about 40% of its imported grapes for the November season directly from growers in Peru.
The News
Kroger plans to invest $5 billion in lower prices by 2029 and pay for it with cost savings, including buying more goods directly from the source, and with money moved out of complex promotions, the grocer told investors in New York on Oct 20. It is the first long-term plan from CEO Greg Foran, and it comes with new store formats built around fresh food.
Kroger expects about $4 billion a year in structural cost savings by 2029, from direct sourcing, better procurement, lower indirect spending and a new back-office center in India. The cost of goods makes up about half of that. Less than 1% of Kroger’s purchases are bought direct today, and CFO David Kennerley wants that share above 10%.
Kroger pointed to grapes: about 40% of its imported grape volume for the November season is secured directly from growers in Peru. On the goods it doesn’t resell, Kroger is consolidating its buying, including fewer suppliers for its shopping carts.
The stores are changing too. Kroger plans about 110 new stores by 2029 in three formats of about 50,000, 75,000 and 99,000 square feet. They give more space to fresh food, prepared meals and private label, and less to general merchandise and apparel, which shoppers use less. Each one also gets a redesigned backroom with more room for pickup and delivery orders. Kroger wants its own brands to reach 40% of sales, up from 35%.
The plan builds on Kroger’s last earnings call, where it tied its price cuts to sourcing savings. Our breakdown of Kroger’s supply chain covers how it got here.
Why It Matters
Kroger is paying for lower shelf prices partly with cheaper buying, so much of the cost lands on the companies that sell to it.
Fewer hands: Moving from less than 1% to more than 10% of purchases bought direct means importers, brokers and distributors handle a smaller share of what Kroger sells.
Harder buying: On the Q2 call, Foran said, “What we don’t want to get in is a situation where people can just turn up and put prices up and not have full justification for that sort of increase.” Kroger has also taken a tougher line with brands: it pulled Boar’s Head deli products from some stores for about a month and no longer carries Red Bull Energy Drink.
Simpler deals: Kroger is phasing out complex offers such as buy-two-get-three, and moving some promotional spending into lower everyday prices. It didn’t say how promotions that suppliers pay for will change.
Who’s Exposed
Produce importers and brokers: Grapes show where Kroger starts, with imported fruit it can buy at the source in season.
Brands that rely on promotions: Fewer multi-buy deals could change how brands spend their promotion money at Kroger.
General merchandise and apparel vendors: The new formats cut the floor space for those categories.
Peer Insights
Walmart has been building direct grape buying since 2005, when Walmart Sourcing opened its first international office in Chile to look for produce. It later moved into Peru and Mexico, following the harvest across the Americas. Volume through its direct import program nearly doubled from 2019 to 2024, and grape in-stock levels rose by more than five percentage points from 2021 to 2024, Walmart said. More on how it runs its network is in our Walmart supply chain breakdown.
What’s Next
November: Kroger’s Peruvian grape season, with about 40% of imported volume bought direct.
End of 2026: lower everyday prices in about 250 stores.
2027: about 450 more stores join the price program.
2029: about 110 new stores open and about $4 billion in yearly savings.
