Kroger’s Investor Day: What the Three-Year Plan Means for Suppliers

Kroger stood in front of investors in New York today and laid out the first multi-year plan of the Greg Foran era. About 230 days into the job, the CEO and his team walked through how they intend to build what they keep calling "America's Favorite Grocer," and how they expect to pay for it.

This was not a quarterly earnings call. It was a three-year roadmap for a company with roughly 2,700 stores across 35 states, reaching more than 20 million households every week. And almost every part of that roadmap touches the supplier side of the table, sometimes directly, sometimes in the space between the lines.

One line came up again and again throughout the day: none of this is new practice, but it is new to Kroger. Direct sourcing, fewer layers, simpler pricing, store-based fulfillment, technology on the shelf. Other retailers have run this way for years. What changed is that Kroger is now committing to it, with targets attached. That framing matters for suppliers, because it means the playbook is proven elsewhere and Kroger has every reason to believe it will work here too.

Here is what was said, and what it means for your brand.

The Growth Goal, and the Words After It

The headline target is about 3% comparable sales growth by 2029. The important part is the phrase that follows it: excluding fuel and pharmacy.

That carve-out is deliberate. Pharmacy has been a real drag on Kroger's reported numbers this year, largely from drug pricing changes tied to the Inflation Reduction Act, and it is a big reason the company trimmed its 2026 identical sales outlook to a range of 0.2% to 0.8% back in September. Fuel swings with gas prices and tells you very little about how the grocery business is actually doing.

By pulling both out, Kroger is telling investors that the grocery store itself has to carry the growth. That means center store, fresh, frozen, dairy, and every aisle your items live in. When the target is set on the grocery business alone, every Category Manager feels that number. Your items are either helping them get to 3%, or they are taking up space that something else could use to get there.

The Honest Admission: Costs Outran Sales

One of the more candid moments of the day was leadership acknowledging that operating costs have been growing faster than sales. That is not a comfortable thing for a retailer to say in front of investors, and it explains a lot about the last nine months.

When costs outrun sales, a grocer has three levers. Raise prices, which Kroger has said it will not do. Cut costs internally. Or get more from the supply base. Today's plan pulls hard on the second and third levers, and the company described the whole thing as "self-funded." That word matters. It means the money for lower shelf prices comes from inside the business, from savings, efficiencies, and purchasing. Suppliers are part of the purchasing line.

Are You a Required Layer, or Just an Added One?

If you take one idea away from today, make it this one. Kroger is going after layers, inside its own walls and inside its supply chain.

Foran used grapes to make the point. Instead of buying through a chain of intermediaries, Kroger is positioning itself at the source in South America, cutting out the middle steps and taking that cost out of the product before it ever reaches the shelf. The slide behind the story was even bigger: direct sourcing grows from under 1% of purchases today to more than 10%, which Kroger called its largest cost takeout ever. Buying smarter on cost of goods alone is a $2 billion line in a $4 billion annual savings plan.

Remember where Foran came from. He ran Walmart's U.S. business, and Walmart's model has always been simple: every layer between the maker and the shopper has to justify its cost, and whatever cost can be removed goes back into price. Today was that playbook, introduced to Kroger. Not new practice, just new to Kroger.

So every supplier should ask an honest question about every step between their production line and Kroger's shelf: is this a required layer, or an added layer?

• A required layer does something Kroger would otherwise have to do itself, or does it better and cheaper. It brings scale, speed, quality control, data, service, or expertise that clearly earns its cost.
• An added layer touches the product or the paperwork but does not change the outcome. It adds margin without adding value. That is exactly the cost this plan is designed to find and remove.

That test applies to everyone: importers, distributors, consolidators, co-manufacturers, sales agencies, and the brand itself. If you cannot clearly explain what your part of the chain contributes, assume Kroger is already asking.

Cost increases have a higher bar now. Leadership was direct that Kroger will not accept cost increases that are not fully justified. Not "will negotiate harder." Will not accept. If you have one coming, your justification needs to be documented, specific, and defensible line by line before you ask, not after the pushback. We covered why in Your Margin and Kroger's Margin Are Two Different Numbers, and today put an exclamation point on it.

Every item has to earn its place. The other message was just as clear. Every item in the store must earn its spot on the shelf and its place in the shopper's basket. Not one or the other. An item that holds a slot but does not drive trips or build baskets is an item that is costing Kroger money.

Our Brands: 35% Today, 40% Tomorrow

Our Brands makes up about 35% of Kroger's sales today. The plan takes that to 40%, backed by 1,000 new Our Brands items over the next three years. Kroger already runs 35 of its own manufacturing facilities, which produce about a third of Our Brands volume, and direct sourcing gives it a second path to build private label at lower cost.

Smart Way, Kroger's opening price point line, was called out as a big part of that expansion, with leadership describing a dramatic increase in its assortment over the next three years.

Five points of share does not appear out of thin air. It comes from somewhere, and much of it will come from national brand shelf space at category reviews. If your item sits in a category where Kroger can build a credible Our Brands alternative, you need a clear answer to the question you will eventually hear: why does a shopper need yours instead of ours?

Promotions Are Too Hard, and Not Everyone Wants the App

Promotions have gotten too hard. Foran has been saying this since his first earnings call in June, when he said the company was getting too many promotional trips and not enough full baskets. Today it became a funded strategy. The $5 billion value investment is paid for, in part, by fewer promotions. The slides were blunt: reduce complex promotions, eliminate unproductive promotions, and sharpen everyday price points. Kroger says early tests drove comparable sales well ahead of the rest of the company, with the new approach reaching about 250 stores by the end of 2026, about 700 by the end of 2027, and broad rollout in 2028 and 2029.

A lot of shoppers do not want to use the app. This one is quietly significant. Kroger noted that only about 1 in 7 of its shoppers buy online, and leadership acknowledged that many customers simply do not want to engage through the app. A large share of today's promotional model runs through digital coupons and in-app offers. If a meaningful portion of shoppers will not clip, a deal built on a clip only reaches part of the store.

Put those together and the direction is clear. "Unproductive" is the word to watch. If a promotion does not grow units, trips, or baskets, expect it to be cut, and expect simpler mechanics and clearer shelf pricing to win. Review your promo calendar now, before your next planning meeting.

New Stores, Built for the Aisle and the Door

Kroger plans about 110 new stores by 2029, in three formats: a full-scale store around 99,000 square feet, a core store around 75,000, and a focused store around 50,000. The idea behind all three is that every store serves the shopper in the aisle and the online order at the door. At the same time, Kroger is closing about 60 underperforming stores and three automated fulfillment centers.

That is a meaningful shift. Kroger is moving eCommerce fulfillment out of large standalone warehouses and into the store network. For suppliers, that means the store is now both a retail floor and a fulfillment center. Your in-stock position, case pack, and shelf placement affect online orders as much as walk-in shoppers. An out-of-stock no longer loses one sale. It can also generate a substitution, and that substitution may be an Our Brands item.

The Connected Store: Tags, RFID, and Robots

Kroger laid out a store technology build that will change how your items are tracked and priced:

• Digital shelf labels: about 1,100 stores today, with expansion planned
• RFID: about 1,500 stores today, growing to more than 2,300 by 2029
• Robotics: about 900 stores today, growing to more than 2,100 by 2029

All of it feeds AI across more than 2,400 store systems. Kroger pointed to a bakery pilot where this kind of data drove a sales lift, cut waste costs roughly in half, and made inventory counts about 70% faster.

What this means for suppliers: Kroger is going to know, store by store and in close to real time, whether your item is on the shelf. Phantom inventory gets harder to hide. Out-of-stocks get visible faster. Price changes can happen without a store team re-tagging a whole aisle. And the data that tells a Category Manager how your item performs gets sharper. That is good news for strong items, and uncomfortable news for weak ones.

Automated Picking in the Store: How?

Kroger listed automating pick solutions as a priority for faster delivery. The honest answer to "how" is that the presentation did not say. But the pieces on the table point to a few likely paths, and to be clear, this part is our read, not Kroger's announcement:

• Knowing exactly where everything is. RFID, digital shelf labels, and shelf-scanning robots are the foundation. You cannot automate picking until the system knows where every item sits and whether it is actually there.
• Smaller automated systems at the store. Having stepped back from big standalone fulfillment centers, the next logical step is compact automation in or attached to the store, where high-velocity items are stored and staged for online orders. The new store formats give Kroger a chance to design that space in from day one.
• AI directing the human picker. In the near term, "automated" may mean AI deciding what to pick, in what order, from which location, with associates doing the physical work faster and with fewer errors.

Foran's Walmart background is a clue here too, since Walmart has spent years experimenting with automated pickup and fulfillment attached to its stores. Whatever form it takes, the supplier implications are the same: accurate item data, consistent packaging and dimensions, and reliable in-stocks matter more when a machine or an algorithm is doing the picking.

AI Is the Engine Under the Whole Plan

If there was one thread running through every part of the day, it was artificial intelligence. Not as a buzzword, but as the mechanism Kroger expects to use to pull cost out of the business and put value back on the shelf.

Reducing layers inside Kroger. The same layers conversation applies to Kroger's own organization. About 3,000 corporate roles will be affected over time, and the stated goal is fewer layers, clearer ownership, and faster decisions. Earlier this month, Reuters reported that represents about 37% of a corporate workforce of roughly 8,200, with AI taking on duplicative work.

AI in the customer's hand. Kroger's AI Shopping Assistant helps shoppers plan meals, find recipes, and build carts around budgets and dietary needs. Kroger said repeat users are spending about 11% more. AI is also aimed at waste, with about $500 million in waste savings targeted by 2029.

What this means for you.

• Fewer people, faster decisions. Fewer layers means fewer people between your pitch and a decision, and a Category Manager covering more ground with less support. Your materials need to be shorter, sharper, and easier to say yes to.
• Your data is your sales rep now. When an AI assistant builds a basket, it works from product data: attributes, ingredients, dietary claims, images, and pricing. If your item data is incomplete, you are invisible to the tool that is building the cart. Clean data in your data pool is no longer housekeeping. It is distribution.
• Expect turnover in your contacts. A change of this size touches merchandising, operations, and support teams. Build relationships across the team, not with one person.

We covered the shopper side of this when Kroger launched its assistant, in Kroger Just Put an AI in Every Customer's Pocket. Today confirmed it is central to the plan.

Other Vendor Signals Worth Noting

• Retail media keeps growing. Kroger reaches more than 20 million households a week and ties about 95% of sales to identified loyalty shoppers. That data is what Kroger Precision Marketing sells, and Kroger expects that business to accelerate.
• Indirect spend is in scope too. Packaging, logistics, technology, facilities, and media buying were all named as areas to reduce spend. If you sell services to Kroger, not just product, the layers question applies to you as well.
• New leaders, new expectations. Former Walmart executive Mark Ibbotson recently joined as EVP and Chief of Store Operations, and Nate Faust leads eCommerce. Expect execution discipline in stores and online to tighten.
• The scorecard changed. Kroger replaced its old 8% to 11% total shareholder return target with a pure earnings growth target. The bar is now set on profit growth alone, and every department is accountable to it.

The Bottom Line

Kroger told investors today that it plans to grow by being simpler, leaner, and clearer about value, and that it intends to pay for it from within. That is a reasonable plan for a company whose costs have been running ahead of its sales. It also means suppliers are part of the funding source, and that every layer, every promotion, and every item is being asked to prove its worth.

The brands that do well under this plan will be the ones that make a Category Manager's job easier: items that grow the basket, promotions that are easy to understand, data that is clean, costs that are defensible, and partners who show up with solutions instead of surprises. As Kroger said more than once today, none of this is new practice. It is just new to Kroger. And that means it matters more now than it ever has.

If you caught something on the webcast that we should dig into, let us know in the comments. We would love to hear what stood out to you.

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From Cincinnati CPG Edge, keeping you in the Kroger know.