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Kroger CEO says half of his customers are under financial pressure

Kroger CEO Rodney McMullen said on Monday the company is working with its manufacturers on how they can work together to reduce costs as its customers remain under financial pressure.

“About half of our clients are under severe financial pressure … their salaries have not kept up with the inflation they have experienced,” McMullen said during a keynote session at NRF 2023. : Retail’s Big Show in New York. Monday.

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McMullen said the company is still thinking about how to make things affordable and accessible for its customers, especially as they remain under pressure from inflation, which he expects will moderate or flatten towards the end of the year.

“We expect that later in the year you’ll start to see some moderation in inflation or stable inflation,” McMullen said. “We still don’t see much deflation now.”

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As the next group of chickens arrive and lay eggs, “you should start to see some deflation in a few categories, but not a lot.”

Egg prices have risen dramatically in recent months due to a lingering outbreak of bird flu combined with soaring feed, fuel and labor costs.

While inflation fell to 6.5% in December compared with a year earlier, marking the sixth consecutive year-over-year slowdown, it is still around three times higher than the pre-pandemic average, underscoring the continued financial burden on buyers.

Rodney McMullen, chairman and CEO of Kroger Co. (Lauren Justice/Bloomberg via Getty Images/File/Getty Images)

McMullen reiterated on Monday that its merger with Albertsons will help it in its efforts to cut costs and lower prices for buyers.

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McMullen said the merger with Albertsons “will create a huge amount of synergies.”

Hooks

Eggs and dairy products are seen in a Kroger supermarket on October 14, 2022 in Atlanta. (Elijah Nouvelage/AFP/Getty Images)

In October, the company said in a statement that it plans to reinvest $500 million in cost savings from synergies to lower prices for customers.

“Every store we keep, we know we’ll start lowering prices from day one,” McMullen said during the keynote session at NRF 2023.

McMullen said the company has cut prices by more than $5 billion since 2006 on an annual basis.

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“If you do what’s right for the customer, you do what’s right for associates and you support your communities, shareholders benefit,” he said.

In the meantime, the company says it has relied on electric coupons to help customers stretch their budget.

Hooks

Kroger CEO Rodney McMullen said the company is working with its manufacturers on how they can work together to cut costs as its customers remain under financial pressure. (Jakub Porzycki/NurPhoto via Getty Images/File/Getty Images)

But he also noticed that, in some areas, his own brands are “gaining a significant share” of the market, according to McMullen.

“What we’re seeing is that customers have turned to our brands initially to save money…when they switch, they stay with us, even when their budget becomes a little less stretched,” a- he declared.

FOX Business’ Megan Henney and The Associated Press contributed to this report.

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