Kroger’s store operating divisions are “evaluating middle management roles and team structures with an eye toward keeping resources close to the customer,” the company said on Wednesday in a statement to Business Insider.
“Store operating divisions are constantly evolving to ensure they build the teams and leaders who will deliver an amazing experience for customers and associates both now and in the future,” a Kroger spokesperson said.
“Store divisions operate independently but all of them are taking steps to ensure they have the right talent in the right store leadership positions.”
Restructuring a business is not unusual
Kroger is not the first business to ever look closely at middle management in restructuring its business. It has been done before.
Walmart’s club store, Sam’s Club, laid off 2,300 employees in 2014, including middle managers, as part of its turnaround. And last year, Walmart closed 63 Sam’s Club stores and converted some of them to e-commerce facilities.
Shares of Kroger are down almost 9 percent year-to-date, and this could be due to increased competition from discount grocers Aldi and Lidl, as well as Walmart and Albertsons, reports CNBC News.
This creates some doubt in Kroger’s plans to take on more e-commerce investments. This became evident in September when CEO Rodney McMullen made his earnings conference call.
Kroger layoff: Hundreds of management jobs cut nationwide – Knoxville News Sentinel Sourcers) October 3, 2019
Kroger reported better-than-expected earnings and same-store sales for the second quarter, but overall revenue came in light. The one fly in the ointment came on the Kroger earnings conference call. The company said it won’t meet its Restock Kroger initiative for $400 million in incremental profit over three years. Meanwhile, Kroger sees Q3 profit as flat vs. a year earlier, defying views for a modest gain.
Keep in mind that Kroger is unionized, and labor costs continue to be an issue with the company. It seems that union pushback has been escalating recently, even though union membership has been on the decline. More and more workers are now demanding a share of the profits that some believe have stayed largely in corporations’ pockets.
“Our financial results continue to be pressured by inefficient healthcare and pension costs, which some of our competitors do not face,” Chief Financial Officer Gary Millerchip told analysts in September in the company’s second-quarter call.
As for Walmart and Amazon, both having a large footprint in the grocery sector – including delivery to your door – they are not unionized. Perhaps it is understandable why Kroger is making a decision to do some restructuring.
