The Economic Roundtable, which describes itself as a “a nonprofit research organization with exceptionally strong capabilities for analyzing economic, social, and environmental conditions,” is out with a new report suggesting that despite relatively strong economic performance, Kroger and Albertsons are understaffing their stores to the long-term detriment of their value propositions.
The report, entitled “Bullies At The Table,” writes in part that “three decades of industry ownership concentration have tilted the playing field in favor of grocery giants, to the disadvantage of small brands and the workers who put food on the shelves in stores. The timing of the aggressive stance taken by grocery companies in 2003 followed a phase of significant consolidation among regional supermarket chains in the 1990s.
“Kroger and Albertsons are industry giants. They employ 28 percent of U.S. grocery workers. Each local market area has come to account for a smaller part of the grocery corporations’ revenues and profits, making the employers less financially vulnerable to strikes and increasingly resistant to labor organizing.”
The report notes that “Kroger’s sales increased 23 percent from 2019 to 2023, and Albertsons’ sales increased 27 percent. Between 2019 and 2024, Kroger’s net income and operating income grew by over 92 percent and 99 percent, respectively. At Albertsons, sales and profit growth was even stronger. Between 2019 and 2024, Albertsons’ net income and operating income grew by over 108 percent and 122 percent, respectively. Kroger and Albertsons’ stock has increased 77 percent more than the overall increase of value in the U.S. stock market.
“Despite high profits, both Kroger and Albertsons have reduced staffing levels. In 2023, Kroger reported 14.1 percent fewer labor hours per store than in 2019. Albertsons’ labor shortfall is 13 percent of its 2019 staffing level. Both Kroger and Albertsons workers report missed breaks, departments closing early due to lack of staff, and tasks – such as the regular cleaning and maintenance of equipment – going uncompleted.
“During the five-year period between 2018 and 2022, Kroger and Albertsons took a combined $15.8 billion in cash out of their businesses and sent it to shareholders in the form of stock dividends and buybacks. As a result, capital expenditures for stores have declined as a share of sales and reduced the capacity of these companies to sustain operations into the future.”
You can read the entire report here.
In a statement to Fast Company, a Kroger spokesperson said, “We are committed to improving associates’ wages and benefits while keeping prices affordable for customers. We intentionally staff our stores to keep them running smoothly and creating an outstanding customer experience. Our decisions are data-driven to balance workload, schedules and customer service. Unrealistic demands by UFCW that do not reflect today’s competitive retail landscape will jeopardize the long-term sustainability of unionized businesses and advance non-union competitors.”
KC’s View:
I suppose that in some ways, both Kroger and Albertsons would argue that any staffing cutbacks are the result of their merger being blocked by regulators – something that they both predicted. Such a response would be disingenuous, of course, since at least according to the data in the story, these problems have been a long time in the making.
This story, along with the Consumer Reports piece that I pointed to above, are painting a not-entirely-positive picture of the grocery business. They come at a time when a lot of stores, big and small, are facing enormous challenges going forward because of economic volatility and greater competition.
If these stories continue to be told, and get any kind of traction, it has the potential of eroding trust among consumers. And trust, as we often point out here, is the like the soul – it never returns once it goes.
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