Kroger to lay off 3,000 corporate employees over 3 years as it leans into artificial intelligence

Grocery store chain Kroger said it will lay off 3,000 corporate employees over the next three years as it ramps up its use of artificial intelligence to streamline operations.

“Technology is reshaping what’s possible,” CEO Greg Foran wrote in a memo to employees on Monday. “The way work gets done is changing across every industry; we must adapt and take advantage of technology. We need to adopt capabilities, reduce duplicative work and look closely at where work is best fit to be done.”

Kroger last month outlined its AI strategy, meant “to improve the customer experience, make work easier for associates and produce better business outcomes.”

Cincinnati-based Kroger is the largest standalone U.S. supermarket chain with 409,000 employees and more than 2,700 stores operating under various brands, including Ralphs, King Soopers, Smith’s and Fred Meyer.

Kroger named former Walmart executive Foran CEO in February, 11 months after the abrupt resignation of its previous CEO.

Foran has a reputation for being tech-savvy and detail-oriented. He led Walmart’s U.S. division from 2014 to 2019, where he focused on cleaning up stores, ensuring items were in stock and improving the fresh produce selection. He also introduced online ordering and pickup, and accelerated Walmart’s digital capabilities.

Walmart has become a larger challenge to Kroger and other traditional grocers as Americans increasingly pick up their groceries along with other general goods that Walmart sells.

Kroger has also felt pressure from fast-growing discount chains like Aldi and Lidl and online behemoths like Amazon.

Kroger proposed a merger with Albertsons in 2022 as a way to better compete with its rivals. But the Federal Trade Commission and two states — Washington and Colorado — sued to block the merger in 2024, saying it would raise prices and lower workers’ wages by eliminating competition. Judges ultimately ruled that the merger should not proceed.

A day after their merger collapsed, Albertsons filed a lawsuit against Kroger, seeking a $600 million termination fee as well as billions of dollars in legal fees and lost shareholder value.

Kroger said the claims were “baseless” and that Albertsons was not entitled to the fee.

Albertsons is facing the same competitive headwinds as Kroger and other grocery chains as customers turn to cheaper alternatives and faster delivery from bigger retailers.

On Tuesday during its second-quarter earnings conference call with investors, CEO Susan Morris alluded to further cost-cutting and streamlining of the company’s structure, including layoffs.

“We did some work last year and saw a substantial reduction in headcount, but quite frankly, there’s more to be had,” Morris said. “And you’ll see us taking aggressive action there in the next 12 to 18 months as well.”

Kroger shares fell 2.2% in afternoon trading Tuesday, to $61.21. Albertsons rose 2.8%, but its shares are down more than 25% this year.