THE FRIDAY 5: Biden Calls Out Shrinkflation; Kroger Promises Lower Prices
Welcome to The Friday 5, Progressive Grocer’s weekly roundup of the top news and trends in the food retail industry. Each Friday, we’ll take a look at the stories that are most important to our readers and also keep tabs on the trends that are poised to impact grocers.
1. Biden Sets His Sights on Shrinkflation
President Biden followed up on his strong criticism of grocery companies in the wake of high food inflation, turning his sights to manufacturers. He released a video on the social media platform X ahead of the Super Bowl decrying the idea of selling less product for the same price, asserting that shrinkflation is a “rip-off.”
David Chavern, president and CEO of the Consumer Brands Association, did share a statement, noting, "We appreciate that the President has to deflect attention away from inflation that has lingered during his administration.” He said that the association would be open to working with the government on solutions that benefit consumers.
2. The Way Forward for Instacart
Despite a big second half of 2023, which included filing for its initial public offering, delivery platform Instacart revealed that it would lay off about 250 employees, or approximately 7% of the company, as it restructures its operations. Three c-suite executives are also leaving the company for personal reasons, including COO Asha Sharma, CTO Varouj Chitilian and Chief Architect JJ Zhuang. Instacart will fill only the CTO role.
News of the job cuts came as the company reported its fourth-quarter financial results, which included total revenue of $803 million, a 6.0% year-over-year increase but still slightly below Wall Street estimates.
3. Kroger Makes Big Promises for Post-Merger Prices
As its pending merger with Albertsons Cos. grows nearer, The Kroger Co. has shared insights into how it lowered prices in previous mergers, along with its commitment to do the same after this latest deal goes through. According to Kroger, it has invested to lower prices consistently since 2003, resulting in $5 billion in customer savings and providing more affordable products to U.S. families.
“We believe the way to be America’s best grocer is to provide great value by consistently lowering prices and offering more choices,” said Kroger Chairman and CEO Rodney McMullen. “When we do this, more customers shop with us and buy more groceries, which allows us to reinvest in even lower prices, a better shopping experience and higher wages. We know this model works because we’ve been doing it successfully for many years, and this is exactly what this merger will bring customers – lower prices and more fresh, affordable choices.”
Kroger now expects the merger to close in August, five months later than it first anticipated. Meanwhile, Colorado Attorney General Phil Weiser has filed a lawsuit in Denver District Court to block the proposed merger due to a perceived elimination of head-to-head competition in the market.
4. Grocers Balance Price and Planet
Both ALDI and Trader Joe’s made news this week for insights into how they balance sustainability efforts with their signature low prices. For ALDI, that involves making thousands of small, intentional operational decisions that have a big impact on keeping the grocer’s prices and environmental footprint low, Emily Wiora, director of sustainability at ALDI USA, told PG in a recent interview.
As for Trader Joe’s, the company remains focused on food rescue efforts, reusable shopping totes, compostable bags for produce and a high number of organic and natural products in an effort to provide price savings for customers, achieve business growth and offer products that meet its responsibility parameters.
5. A New CEO for a Combined New Company
A few weeks after the merger between Foxtrot Market and Dom’s Kitchen & Market, PG shared exclusively that the newly christened Outfox Hospitality has a new CEO. The combined company announced that Rob Twyman will take over that top position starting March 11. Twyman spent nearly three decades at Whole Food Market, serving at every leadership level up to and including EVP of global operations.
BONUS: Grocery Outlet Makes an Acquisition
While the news came in late this week, Grocery Outlet’s acquisition of United Grocery Outlet is garnering a lot of attention from PG’s readers. United Grocery Outlet is an extreme value, discount grocery retailer operating throughout the Southeastern United States, and is being acquired from affiliates of Gen Cap America, Inc. and current and former UGO management. With 40 stores and a distribution center, the acquisition of UGO will expand Grocery Outlet's presence into Tennessee, North Carolina, Georgia, Alabama, Kentucky and Virginia.
