The Unvarnished Truth: Kroger is a Company Built Around Activity, Not Results

Overview

I wrote this article based on my experience consulting for Kroger, years of research on grocery, retail, supply chain, logistics, technology, artificial intelligence, corporate governance, and business strategy, and dozens of discussions with current and former Kroger executives, associates, vendors, consultants, and individuals familiar with the company.

Greg Foran calls what he is learning inside Kroger “the unvarnished truth.”

I call it the brutal truth.

And the brutal truth is this: Kroger is not in trouble because it lacks scale. Kroger is in trouble because it allowed scale to become complexity, complexity to become bureaucracy, and bureaucracy to become a substitute for results.

Kroger remains one of the most important food retailers in America. It has thousands of stores, valuable banners, pharmacies, fuel centers, private-label brands, manufacturing assets, customer data, loyalty programs, and a large supply chain network.

But assets do not guarantee success.

Scale with discipline is power.

Scale without discipline is weight.

Right now, Kroger has too much weight.

Greg Foran did not inherit a normal CEO transition. He inherited a cleanup. Kroger continues to suffer from decisions made during the tenure of former CEO Rodney McMullen: weak executive succession, questionable capital allocation, technology confusion, excessive organizational complexity, a failed merger attempt with Albertsons, and a culture that too often rewarded internal activity instead of measurable outcomes.

Kroger’s problems are often described in familiar retail terms: pricing pressure, out-of-stocks, weak digital economics, intense competition from Walmart, Costco, Aldi, Amazon, H-E-B, Publix, and other strong operators, and the lingering damage from an overly ambitious automated fulfillment strategy.

Those are real issues.

But they are symptoms.

The deeper problem is cultural and operational: Kroger became an activity-based company instead of an outcome-based company.

That has to end.

The McMullen legacy

Rodney McMullen led Kroger for more than a decade. He left behind a company with scale, data, stores, customer relationships, and national relevance.

He also left behind a company that, according to people familiar with the business, rewarded activity over performance.

When I worked with Kroger as a consultant, one of the earliest observations I made was that I had rarely seen so many people confuse activity with productivity. People were busy. Meetings were constant. Projects were everywhere. But too little work appeared tied to measurable enterprise value.

That is how bureaucracies metastasize.

Reports replace decisions.

Meetings replace ownership.

Presentations replace execution.

Projects replace outcomes.

Sources inside and around Kroger have told me that McMullen liked to hear about “million-dollar ideas.” It sounds ambitious. In grocery, it can be dangerous.

Grocery is not won by chasing one grand idea after another. Grocery is won by executing thousands of small things correctly every day:

Full shelves.

Fair prices.

Fresh food.

Clean stores.

Accurate forecasts.

Simple promotions.

Reliable supply.

Disciplined labor.

Good merchandising.

Strong vendor relationships.

Fast technology.

Profitable fulfillment.

Kroger drifted too far away from that operating truth.

McMullen’s attempted merger with Albertsons was, in my view, one of the clearest examples of this problem. I wrote repeatedly that the merger would fail. It did. Instead of pursuing a transaction that strengthened Kroger in attractive geographies or added capabilities Kroger needed, Kroger pursued a complicated, expensive, politically vulnerable deal that regulators were likely to challenge.

The board owns responsibility for that, too.

A board’s job is not merely to support management. A board’s job is to challenge management, test assumptions, evaluate capital allocation, oversee succession, and protect long-term shareholder value.

Kroger’s board failed to challenge enough.

Now Foran has to fix not only the company, but the governance structure that allowed the company to drift.

Foran’s first mandate: change the board

Foran cannot directly fire board members. The board is his boss. But he can force a board refreshment conversation, and he should.

He should meet with Kroger’s largest shareholders — Berkshire Hathaway, Vanguard, BlackRock, State Street, Wellington, and other major holders — and make the case that Kroger needs a turnaround board, not a legacy oversight board.

The message should be simple:

Kroger requires directors with deep experience in grocery operations, supply chain, logistics, pricing, merchandising, technology, AI, digital commerce, retail media, last-mile delivery, corporate restructuring, and capital allocation.

The current board does not have enough of that.

In my opinion, the following directors should be replaced or put under immediate review:

Ronald Sargent

Sargent should leave the board. This is not personal. It is accountability. He was in a senior board leadership position during years when Kroger approved or tolerated major strategic decisions now being questioned, including the Albertsons merger attempt, Ocado expansion, executive succession decisions, and the operating culture Foran must now repair. He should not be chairing the cleanup.

Nora Aufreiter

Aufreiter has consulting and retail experience, but Kroger does not need more general strategy oversight. It needs hard grocery operating governance. After years on the board, she represents legacy oversight. Kroger needs a former grocery CEO, food retail operator, merchandising executive, or supply chain leader in this seat.

Anne Gates

Gates brings financial and consumer-products experience, but Kroger’s crisis is operational. The company needs finance oversight tied to grocery economics, fulfillment profitability, logistics, store performance, restructuring, and strategic alternatives. Kroger needs a retail restructuring CFO or food distribution finance expert in this seat.

Ashok Vemuri

Vemuri’s technology services background is not enough for Kroger’s current challenge. Kroger needs a true retail technology, AI, data platform, digital commerce, and enterprise architecture operator. The company does not need generic technology transformation language. It needs someone who can challenge the technology organization and understand whether Kroger is building, buying, partnering, integrating, or wasting time.

Karen Hoguet

Hoguet should be reviewed hard. She brings financial, retail, real estate, and M&A experience. That can be useful. But she also chaired or influenced finance oversight during a period when Kroger made major capital allocation decisions that deserve scrutiny. If she challenged Ocado, Albertsons, digital profitability, G&A bloat, and 84.51° effectively, she may be valuable. If not, she should be replaced.

Mark Sutton

Sutton should be put on notice. He can remain temporarily for governance stability, but he now owns the board refreshment process. If he leads a real refresh, he can remain. If he protects the club, he should go.

I would keep Kevin Brown, Amanda Sourry, Mitchell Butier, and Greg Foran, but I would add four new directors:

1. A world-class grocery operator.
2. A grocery supply chain and logistics operator.
3. A retail AI and digital commerce operator.
4. A restructuring and capital allocation expert.

Kroger’s board should not be refreshed for optics. It should be refreshed because the company needs directors who can ask the questions that should have been asked years ago.

Kroger has a leadership problem

Several senior executives are under scrutiny, according to people familiar with the company.

Yael Cosset, Kroger’s Chief Digital and Technology Officer, and Mary Ellen Adcock, Chief Merchandising and Marketing Officer, have been described by sources as executives promoted into roles that stretched beyond their capabilities.

David Kennerley, Kroger’s CFO, has also drawn criticism from people familiar with internal views, who describe him as too deep in the weeds and not the strategic financial leader a turnaround requires.

Milen Mahadevan, Chief Data and AI Officer and President of 84.51°, has also been cited by sources as someone whose role and mandate should be rethought.

Jim Clendenen’s technology and AI organization should also be reviewed. Kroger may have built internal AI tools, but the question is not whether tools exist. The question is whether the tools materially improve store execution, supply chain performance, pricing, availability, labor productivity, cost, and customer experience.

Kroger would likely defend the résumés and qualifications of its leadership team. That is beside the point.

In a turnaround, the question is not whether executives have impressive backgrounds.

The question is whether they are the right people for the next chapter.

Foran should ask one question of every senior executive:

Would I hire this person from the outside today for the role they currently hold?

If the answer is no, that person should not remain in the role.

The order of battle

Foran cannot replace everyone at once without creating chaos. But he also cannot move so slowly that Kroger’s culture absorbs him.

The first leadership change should be merchandising and pricing.

Kroger’s pricing and promotion model has become too complex. Multiple sources say Kroger has “broken the contract with the customer” by training shoppers to expect promotions while making value harder to understand.

That is a serious charge.

Grocery customers want trust. They want to believe the price is fair, the offer is clear, and the product will be available. When customers believe prices are a game, trust erodes.

Kroger needs a merchant leader who can simplify pricing, reduce promotional clutter, rebuild supplier discipline, improve private-label value, and restore customer confidence.

The company does not need more marketing language. It needs commercial discipline.

The second leadership change should be technology.

Kroger cannot compete with Walmart, Amazon, Costco, H-E-B, Aldi, and Publix if technology remains disconnected from store execution, pricing, inventory, labor planning, loyalty, replenishment, and fulfillment.

Technology at a modern grocer cannot behave like an internal control tower protecting its own projects. It must operate as a product organization accountable for business outcomes.

The third move should be hiring a world-class Chief Supply Chain Officer.

This may be the most important outside hire Foran makes.

People familiar with Kroger say suppliers do not always ship the full quantity of pallets Kroger orders and often prioritize Walmart and other retailers. Some vendors view Kroger as difficult to work with. Others view Kroger as a pushover. Both can be true if the company is inconsistent, rigid in the wrong places, and operationally weak.

Walmart’s advantage is not simply scale. It is the discipline with which it uses scale.

Kroger must rebuild that discipline.

Supplier fill rates, OTIF, shorted pallets, lost sales, DC dwell time, freight costs, carrier rejection rates, and out-of-stock impact must become executive-level metrics.

Kroger needs a Chief Supply Chain Officer with deep expertise in grocery logistics, perishables, transportation, replenishment, vendor compliance, DC operations, fresh flow, and network strategy. Colin Yankee and Carson Landsgard are two names Kroger should evaluate.

The fourth change should be data and AI.

Kroger needs AI, but not AI theater.

AI should not be a collection of internal tools, pilots, training modules, and futuristic concepts. AI should improve availability, pricing, promotion effectiveness, replenishment, supplier accountability, store execution, fulfillment profitability, and enterprise productivity.

Every AI project should have an owner, a metric, and a financial target.

If an AI initiative cannot explain how it improves availability, margin, labor productivity, customer experience, supplier compliance, pricing, cost, or speed, it should not be funded.

The fifth change should be finance.

A turnaround CFO cannot merely report numbers. A turnaround CFO must change numbers.

Kroger needs a CFO who can fund price investment, reduce low-value G&A, impose capital discipline, evaluate e-commerce economics, challenge low-return projects, support strategic alternatives, and tie spending to measurable outcomes.

If the current CFO cannot become that leader, Kroger should replace him.

Do not start a price war

Let me begin by stating this little known fact: A 1% decrease in sales at Kroger is a 10% loss in EBITA.

Read that again.

Foran is right that Kroger must become more price competitive.

But Kroger should not enter a broad price war with Walmart, Costco, Aldi, Amazon, Trader Joe’s, H-E-B, Publix, and other strong operators.

Kroger cannot win that war.

Walmart can absorb more pain. Aldi has a structurally lower-cost model. Costco has a membership-driven trust model. Amazon can subsidize grocery through Prime, logistics, advertising, cloud economics, and data.

Kroger’s goal should not be price war.

It should be price trust.

That means Kroger should identify the items customers use to judge value like milk, eggs, bread, chicken, ground beef, bananas, cereal, coffee, pet food, paper goods, detergent, pharmacy essentials, and other known value items, and become visibly competitive on those items.

Kroger should reduce promotions, simplify digital coupons, make value easier to understand, and stop training customers to wait for deals.

Lower prices without simpler operations will not fix Kroger.

Low prices that are not funded by productivity are not strategy. They are margin destruction.

Kroger runs the risk of losing significant revenue as their competitors; especially Walmart, Amazon, and Aldi, will refuse to lose to Kroger on price. Instead of Kroger increasing sales, Kroger will experience a decrease in sales as their customers will find lower prices at Kroger’s competitors.

One more time…a 1% decrease in sales is a 10% loss in EBITDA.

Foran claims there is buried treasure to be found on Grocery Island. The bad news is that Walmart controls the island. If Foran isn’t careful, he will march Kroger into quicksand.

Fix produce and promotion governance

Produce is not center-store grocery.

You cannot manage cherries, berries, lettuce, melons, citrus, avocados, and other perishables as if they are paper towels.

Weather matters.

Crop timing matters.

Quality matters.

Shelf life matters.

If a crop is materially reduced because of rain, heat, frost, disease, or timing, Kroger should not force an ad and then blame vendors when stores have empty displays or poor-quality product.

That is not toughness.

That is incompetence.

Kroger needs produce exception protocols that allow the company to change ads, adjust timing, substitute items, communicate to stores, and protect the customer experience when supply realities change.

A merchant organization that ignores reality will create out-of-stocks, poor quality, customer disappointment, and vendor hostility.

Rebuild vendor relationships

Kroger may have been too soft with suppliers in the past. But the answer is not to become abusive or rigid.

Walmart is not powerful because it is mean.

Walmart is powerful because it is disciplined.

Kroger must become demanding, professional, predictable, fact-based, and operationally credible.

I would create two scorecards.

The first is a vendor scorecard:

• Fill rate
• OTIF
• Shorted pallets
• Product quality
• Promotional compliance
• Responsiveness
• Claims
• Recovery plans

The second is a Kroger self-scorecard that vendors can use to evaluate Kroger:

• Forecast accuracy
• PO accuracy
• Communication quality
• DC dwell time
• Appointment performance
• Claims fairness
• Payment accuracy
• Professionalism
• Ad flexibility in weather-driven categories

Accountability must go both ways.

If Kroger is hard to serve, vendors and carriers will prioritize others.

Kroger’s technology nightmare: WMS, TMS, Oracle RMS, and failed sequencing

Kroger’s technology problems are not limited to digital shopping or AI. They reach directly into the operating core of the company.

According to multiple sources familiar with Kroger’s supply chain and technology operations, Kroger conducted a search before the attempted Albertsons merger for a new Warehouse Management System to replace a 30-year-old legacy WMS that had been modified repeatedly over decades.

After defining requirements, running an RFP, and conducting due diligence, Kroger narrowed the decision to two finalists: Blue Yonder and Manhattan Associates.

Kroger selected Blue Yonder.

That should have been the beginning of a disciplined supply chain technology modernization.

Instead, the project became another example of Kroger’s broken sequencing, weak data readiness, and unclear technology governance.

When implementing a WMS, two things are non-negotiable:

Clearly defined requirements.

Clean data.

Kroger appears to have lacked both at the level required.

The result was predictable: implementation issues, rising costs, delays, confusion, and a project that became harder than it needed to be.

Then Kroger decided to acquire Albertsons.

During merger-related discussions, Kroger learned that Albertsons used Manhattan Associates WMS, not Blue Yonder. Kroger then pivoted away from Blue Yonder and toward Manhattan.

Think about that.

Kroger selected Blue Yonder.

Started the work.

Then reversed direction because of a merger that ultimately failed.

Now Kroger is left dealing with the consequences: a partially implemented Blue Yonder environment, a Manhattan WMS implementation that sources say is struggling, and a technology organization that still has not demonstrated the ability to create a coherent enterprise roadmap.

It gets worse.

Kroger evaluated which Transportation Management System to use after they had originally selected Blue Yonder. The candidates include Blue Yonder, Oracle OTM, and Manhattan. This decision should have been made before Kroger pivoted WMS strategy.

Kroger selected Manhattan’s TMS even though Blue Yonder and Oracle OTM are rated higher.

A WMS and a TMS should not be treated as separate software decisions. They are part of the same operating architecture. Warehouse operations, inbound freight, outbound routing, dedicated fleet, appointment scheduling, yard management, supplier performance, store replenishment, carrier execution, and cost-to-serve all have to work together.

Kroger appears to be making technology decisions in pieces instead of designing the operating system first.

That is a leadership failure.

It is also a governance failure.

Kroger has also been working for years to implement Oracle Retail and Oracle Retail Merchandising System. Oracle RMS should be a critical merchandising and retail operations platform. But sources say the broader Oracle Retail implementation remains incomplete, with significant work still required to modernize and integrate core functions across the enterprise.

This matters because Kroger cannot execute a modern grocery operating model on fragmented systems, dirty data, unclear decision rights, and siloed technology projects.

The issue is not whether Blue Yonder, Manhattan, or Oracle are good systems.

They are all capable platforms.

The issue is whether Kroger has the leadership, data quality, process discipline, integration roadmap, and operating model required to implement any of them successfully.

Right now, sources indicate the answer is no.

Transportation: do not assume Kroger should manage everything in-house

Kroger’s transportation model also needs a hard review.

Sources say Kroger uses a hodgepodge of legacy and limited systems to manage outbound dedicated fleet routing, intra-facility movements, and some inbound transportation.

At the same time, Merchandising owns too much of the supplier relationship, including freight-related decisions.

That is a mistake.

Supply chain should own transportation strategy. Merchandising should not be the de facto owner of freight.

Kroger should take greater command and control of inbound freight, including a full analysis of prepaid versus collect terms. The company should evaluate where converting supplier freight from prepaid to collect would create savings, better visibility, better routing, and stronger carrier leverage.

Kroger spends billions annually on freight, including dedicated fleet costs. If Kroger managed inbound transportation with greater discipline, visibility, routing control, appointment compliance, and carrier strategy, the savings could be significant.

But Kroger should not assume that the best answer is simply to implement Manhattan’s TMS and manage everything internally.

Kroger should assess outsourcing transportation management to a leading 3PL or managed transportation provider.

Kroger should not say:

“We’re implementing a TMS, everything will be fine.”

Kroger should ask:

“What operating model gives Kroger the best transportation capability, lowest total cost, strongest visibility, highest service, and fastest time to value?”

That may be an internal model supported by a best-in-class TMS.

It may be a managed transportation model with a 3PL.

It may be a hybrid model.

Kroger should run a disciplined comparison.

A transportation management outsourcing assessment should evaluate:

• Total freight spend
• Dedicated fleet utilization
• Inbound collect conversion opportunity
• Outbound routing performance
• Store delivery service levels
• Carrier tender acceptance
• Cost per mile
• Detention and dwell costs
• Appointment compliance
• Backhaul utilization
• Claims
• Fuel management
• Spot market exposure
• Contract carrier performance
• Network optimization
• Technology integration
• Staffing requirements
• Speed to value

Potential managed transportation partners should be required to prove what savings and service improvements they can deliver versus Kroger managing the function internally.

Kroger should not outsource blindly.

But it should test the market.

If a 3PL or managed transportation provider can deliver better routing, better carrier management, better visibility, faster implementation, improved tender acceptance, lower freight costs, and stronger operating discipline than Kroger can achieve internally, Foran should seriously consider it.

The goal is not to protect internal control.

The goal is to improve outcomes.

Fix the PO process and distribution center dwell time

If multiple people have to touch a PO before it reaches a vendor, the process is broken.

If trucks wait excessive hours at Kroger DCs, the supply chain is broken.

These are not back-office issues. These are customer issues.

Kroger should launch two 90-day sprints.

The first should be a PO simplification sprint:

• Map every PO touchpoint.
• Remove unnecessary approvals.
• Automate routine orders.
• Move low-value work to the Kroger Capability Center.
• Use AI to triage exceptions.
• Create supplier visibility.
• Measure cycle time from demand signal to PO transmission.

The second should be a shipper-of-choice sprint:

• Identify the worst DCs by dwell time.
• Fix appointment discipline.
• Improve receiving labor planning.
• Increase drop trailer use.
• Reduce live unload delays.
• Pay detention fairly.
• Improve yard management.
• Track carrier rejection.
• Hold DC leaders accountable.

Kroger cannot claim to be serious about supply chain if trucks sit, vendors wait, and stores go out of stock.

Divest Kroger Health or enter a JV with CVS

Kroger should seriously evaluate divesting Kroger Health to CVS Health or entering into a joint venture with CVS.

Kroger does not need to own and operate every healthcare asset itself. Kroger needs to preserve pharmacy traffic, customer relationships, loyalty value, OTC sales, food-as-medicine opportunities, and health-related customer engagement while reducing complexity.

A full sale to CVS could make sense if Kroger receives an attractive valuation and negotiates long-term commercial agreements that keep pharmacy and health services connected to Kroger stores, Kroger loyalty, Kroger data, and Kroger’s food-as-medicine strategy.

CVS has healthcare infrastructure, pharmacy expertise, PBM capabilities, clinical assets, insurance relationships, and operating scale that Kroger does not.

A joint venture may be smarter. Kroger could contribute pharmacies, clinics, customer access, loyalty data, and food-as-medicine capabilities. CVS could contribute healthcare operating expertise, payer relationships, clinical infrastructure, pharmacy know-how, and technology.

The Little Clinic should be placed under immediate review. If clinics drive prescriptions, grocery trips, loyalty, employer partnerships, and profitable health engagement, keep them inside a CVS-Kroger structure. If not, close them, sell them, or transfer them to a better operator.

Kroger is a grocery company with valuable health-adjacent assets.

It is not a healthcare company.

Launch Kroger Retail Services

Kroger needs discipline, but it also needs a big idea that is grounded in operational logic.

That idea is Kroger Retail Services.

But the sequence matters.

First, fix Kroger’s supply chain.

Second, turn the fixed supply chain into a platform.

Third, use that platform to serve independent grocers.

Fourth, selectively become a wholesaler, technology provider, and logistics partner to independent grocery retailers.

Independent grocers are under pressure. They lack scale, technology, purchasing leverage, supply chain discipline, data, loyalty tools, pricing science, fulfillment capability, and AI.

Vori, led by Brandon Hill, is an all-in-one grocery POS and operating platform built specifically for independent grocers. It connects POS, loyalty, pricing automation, ordering, inventory, and reporting.

Kroger should partner with or acquire Vori.

A Kroger + Vori + logistics model could create something more powerful than a traditional wholesale business. Kroger could become the operating backbone for independent grocery.

The model:

• Vori becomes the independent grocer operating system.
• Kroger Logistics becomes the fulfillment and replenishment backbone.
• Kroger private label becomes the margin enhancer.
• Kroger retail media and analytics provide the insights layer.
• Palantir and Claude become the decision-intelligence layer.

Independent grocers could retain their local banners and independence while gaining access to national-scale tools.

Kroger Retail Services could provide:

• Wholesale supply
• Private-label access
• Store replenishment
• Fresh distribution
• Vendor buying programs
• Pricing tools
• Promotion planning
• Loyalty tools
• Retail media
• Ordering and inventory systems
• Delivery and pickup enablement
• Last-mile support
• Data and analytics
• AI-powered forecasting

This could create revenue from wholesale margin, logistics fees, technology subscriptions, retail media, private label, data services, delivery fees, procurement services, and equipment or services marketplaces.

It would also improve Kroger’s own density, transportation leverage, private-label scale, and supplier negotiations.

But Kroger should not launch Kroger Retail Services until its internal supply chain performance improves.

Kroger has no right to sell logistics excellence until it demonstrates logistics excellence.

E-commerce reset

Kroger’s online fulfillment strategy needs a harder economic lens.

The company’s bet on Ocado-powered automated fulfillment centers was once pitched as a way to leapfrog competitors in grocery e-commerce. The problem is that grocery delivery is a density business.

Automation does not solve weak demand density. In some cases, it magnifies the cost of getting the network wrong.

Kroger should use a segmented fulfillment model.

Stores should handle much of same-day fulfillment because they are close to customers.

Pickup should remain a strategic priority because it is often more economical than delivery and keeps the customer relationship inside Kroger’s ecosystem.

Micro-fulfillment centers should be used selectively in dense markets where automation improves pick productivity and order accuracy.

Large automated facilities should be retained only where utilization, density, and economics justify them.

The key is to stop measuring digital success by sales growth alone.

The right questions are:

• What is contribution profit per order?
• What is pick cost?
• What is delivery cost?
• What is the substitution rate?
• What is order accuracy?
• What is repeat rate?
• What is delivery density?
• What is cost to serve by market and fulfillment node?

Digital grocery without economics is not transformation.

It is margin leakage.

Last-mile delivery

Walmart has Spark. Kroger does not have an equivalent asset at comparable scale. That is a strategic vulnerability.

Kroger should continue using Instacart, DoorDash, Uber Eats, and other platforms tactically, but it should not allow outside platforms to control too much of its customer interface, delivery economics, labor capacity, and data.

Kroger should expand its relationship with Nash and evaluate whether it should acquire or build its own last-mile platform.

A white-label delivery capability similar to Skipcart should be studied. Kroger should also assess whether Skipcart, GoPuff, or other last-mile assets could strengthen its control over delivery.

A Kroger last-mile platform does not have to replace third parties overnight. It could begin in Kroger’s highest-density markets and operate alongside external partners.

But over time, Kroger should own more of the delivery promise attached to its own brand.

A grocer that does not control fulfillment and delivery will struggle to control the customer experience.

AI without theater

Kroger’s AI strategy should be practical, boring, and profitable.

The first priority should be availability: predicting and preventing out-of-stocks before customers encounter empty shelves.

The second should be pricing and promotions: identifying which offers drive incremental demand and which merely subsidize purchases that would have happened anyway.

The third should be supplier performance: detecting short shipments, recurring failures, lost sales, and vendor patterns.

The fourth should be store execution: labor planning, shrink reduction, pickup productivity, task prioritization, and fresh production.

The fifth should be enterprise productivity: automating low-value administrative work.

Kroger should partner with Pallet, led by Sushanth Raman, to deploy AI agents across repetitive, document-heavy, workflow-heavy areas of the business. Kroger should also assess other AI-native retail platforms, including Aisle AI, SYNQ Technology, and Kallikor for simulation and supply chain analytics.

Kroger should also stop wasting capital on futuristic concepts that are not tied to near-term value. Autonomous trucks and humanoid robots may someday matter. But Kroger has immediate problems in availability, pricing, supply chain, replenishment, fulfillment, and productivity.

Kroger does not need AI theater.

It needs an operating brain.

Partner with Palantir Technologies

Kroger should partner with Palantir immediately. Palantir should become Kroger’s enterprise decision and execution platform.

It should connect:

• POS data
• Loyalty data
• Pricing files
• Promotion calendars
• Supplier contracts
• Purchase orders
• Warehouse data
• Transportation data
• Store inventory
• Online orders
• Pickup and delivery data
• Labor schedules
• Shrink data
• Financial data
• Vendor performance data
• Customer service data

Palantir’s value would be creating an operational ontology: a living map of how stores, SKUs, suppliers, DCs, promotions, customers, orders, trucks, labor, inventory, and financial outcomes relate to each other.

That is what Kroger needs.

Claude should operate inside that environment as a reasoning, explanation, document, and workflow assistant.

Claude should help Kroger answer:

• Why are stores out of stock on these SKUs?
• Which suppliers are shorting pallets by DC and division?
• Which promotions are destroying margin without driving incremental demand?
• Which pricing actions are confusing customers?
• Which vendor contracts allow Kroger to pursue penalties?
• Which digital orders are unprofitable and why?
• Which store labor gaps are hurting pickup performance?
• Which AI projects have no measurable ROI?
• Which reports and workflows can be eliminated?

Palantir organizes enterprise reality.

Claude explains it, reasons over it, and helps people act.

Together, they could give Kroger one operating picture, better data governance, faster decision-making, stronger supplier accountability, better pricing discipline, better promotion analysis, better fulfillment economics, better AI governance, and less fake work.

A standalone Claude deployment risks becoming another productivity toy.

Claude inside Palantir can help Kroger operate.

That is the difference.

Another option, and one that will be easier for Kroger to implement, is partnering with Lyric, led by Ganesh Ramakrishna. Lyric is a legitimate alternative to Palantir.

Cultural reset

Foran’s hardest task will be changing Kroger from an activity-based company to an outcome-based company.

That requires more than slogans.

Every function needs a scorecard.

Merchandising should be measured on unit growth, margin dollars, price perception, promotion ROI, in-stock levels, and category performance.

Supply chain should be measured on supplier fill rate, store service, forecast accuracy, dwell time, tender acceptance, and cost per case.

Technology should be measured on business value delivered, cycle time, adoption, uptime, and manual work eliminated.

AI should be measured on financial impact.

Finance should be measured on capital discipline, G&A productivity, margin quality, and cost-to-serve visibility.

Meetings should be cut.

Projects should be killed.

Roles should be challenged.

Executive compensation should be tied to measurable outcomes.

Foran should ask a simple question across the company:

What would break if this role, project, report, or meeting disappeared?

If the honest answer is “nothing,” it should disappear.

Kroger must also raise the bar on talent. The company should hire and promote based on merit, excellence, intelligence, operating capability, urgency, and measurable results.

Kroger needs people who want to build the best grocery retailer in America.

Headquarters and talent

Kroger struggles to attract elite talent because its headquarters is in Cincinnati.

That is not an insult to Cincinnati. It is a strategic reality.

Kroger needs stronger access to executives and talent in technology, AI, product management, digital commerce, supply chain, logistics, pricing, merchandising, and transformation.

My recommendation remains the same as it was in 2018: Kroger should relocate its future corporate center of gravity to Texas.

Frisco, Plano, Dallas, McKinney, Prosper, and Austin should all be evaluated. Charlotte and Nashville should also be considered.

Bentonville is an option because of the retail talent base around Walmart, but it is not my preferred option.

Texas is where Kroger should go.

Kroger does not need to abandon Cincinnati overnight. It can take a phased approach. But Cincinnati should not remain the unquestioned center of gravity for the future Kroger.

84.51° should be dismantled and rebuilt

In 2015, Kroger acquired the U.S. assets of its data science partner dunnhumby. Out of that grew 84.51°, a retail data, analytics, insights, loyalty, and retail media business.

84.51° has value.

That does not mean Kroger should keep it structured as it is.

In 2019, PearlRock Partners was created by Kroger and Lindsay Goldberg to identify, invest in, and grow emerging consumer brands using Kroger’s distribution, merchandising expertise, manufacturing and sourcing support, and 84.51° data and analytics.

That raises a question:

Why is Kroger using 84.51° to help private-equity-backed emerging brands while Kroger’s own stores struggle with pricing, promotions, out-of-stocks, PO complexity, replenishment, forecasting, and customer trust?

PearlRock may prove 84.51° can help Kroger act like an investor.

It does not prove 84.51° is helping Kroger act like a better grocer.

84.51° should be placed under strategic review immediately.

The question is not whether data science matters. It does.

The question is whether Kroger is getting enough enterprise value from 84.51° relative to its cost, headcount, and strategic importance.

There are three different businesses inside 84.51°.

Kroger Precision Marketing

This is the commercial retail media and monetization business. It should have its own P&L, margin targets, growth targets, and outside benchmarking against Walmart Connect, Target Roundel, Amazon Ads, Albertsons Media Collective, and other retail media networks.

Kroger should assess a JV, minority sale, or strategic partnership with Circana, Publicis/Epsilon, The Trade Desk, LiveRamp, or Accenture.

Kroger Decision Science

This should remain inside Kroger and be embedded directly into pricing, merchandising, supply chain, replenishment, stores, e-commerce, labor planning, shrink, private label, and assortment localization.

If Kroger partners with Palantir, Kroger Decision Science becomes more valuable, not less. Palantir provides the operating platform. Kroger Decision Science provides the models, logic, and business interpretation. Claude helps explain and operationalize the outputs.

Analytics Operations

Routine reporting, dashboard maintenance, recurring analysis, campaign support, data pulls, and workflow administration should be automated, moved to the Kroger Capability Center, outsourced, or eliminated.

Not everything belongs in Cincinnati.

Not everything requires expensive U.S.-based analytics talent.

Not everything should be treated as strategic.

84.51° should be dismantled, not defended.

The role of India

The Kroger Capability Center in India should be reviewed carefully.

Kroger partnered with Accenture to design the center, but sources have raised concerns about whether Kroger is simply planning to “lift and shift” broken processes.

That would be a mistake.

Kroger should not outsource broken processes.

Kroger should fix, simplify, automate, and then move work.

Agentic AI should be used to redesign workflows before they are sent offshore.

Merchandising, analytics operations, finance support, reporting, PO workflows, customer service support, vendor claims, and administrative processes should all be reviewed for automation and relocation.

The Capability Center should report to a COO or transformation leader, not simply finance. Outsourcing is an operating model decision, not just a cost decision.

Foran should audit the plan before it scales.

Acquisitions: do not acquire complexity

Kroger should not pursue another large acquisition until it fixes the core business.

The Albertsons merger consumed time, money, credibility, and leadership attention. Kroger must settle the remaining dispute as professionally as possible and move on.

There should be no acquisition unless it fixes a core capability Kroger cannot build fast enough.

That means Kroger should not buy revenue.

It should not buy stores for the sake of stores.

It should not buy anything that distracts Foran from merchandising, pricing, supply chain, technology, AI, online fulfillment, and culture.

For the next 24 months, Kroger’s best M&A and partnership strategy should be:

• Partner with Palantir Technologies.
• Expand the relationship with Nash and AutoLane.
• Assess an acquisition of Skipcart or GoPuff.
• Partner with Kallikor for supply chain simulation and analytics.
• Partner with or acquire an AI-native retail platform such as Aisle AI.
• Partner with SYNQ Technology.
• Partner with Pallet.
• Finalize the rollout of electronic shelf labels.
• Assess a partnership with CloudKitchens and Atoms.
• Partner with or acquire Vori.
• Evaluate transportation management outsourcing before committing to a TMS-only strategy.

Large acquisitions should wait.

If Kroger later pursues Northeast expansion, it should evaluate Weis Markets, Northeast Grocery, selected Ahold Delhaize USA banners, Big Y, and possibly Wakefern/ShopRite member assets.

Kroger may choose to acquire Giant Eagle, a company they tried to acquired several years ago but the CEO of Giant Eagle turned down Kroger. I’m not a a fan of Giant Eagle. I think the company is poorly run. I only recommend acquiring Giant Eagle if the price to do so is between $1.5B to $2.B at most. Giant Eagle will require a Herculean effort to turn it around. Kroger should divest all of the stores in the locations with the highest crime rates. Acquiring Giant Eagle will mean very little.

Although an argument can be made that Kroger should not acquire Ahold Delhaize USA (ADUSA) due to the cost and complexity, from a strategy perspective, Kroger has to assume that Albertsons may merge with Ahold Delhaize USA. ADUSA almost merged in 2022, but the merger was called off. A combined ADUSA and Albertsons poses a legitimate threat to Kroger.

My advice to Kroger is assess an acquisition of ADUSA, but place special focus on identifying legitimate opportunities for reducing costs across the combined companies, and identifying where the combined companies can collaborate such as procurement, supply chain management, logistics, advertising, and marketing.

A combined Kroger/ADUSA will create a supermarket with $210B in annual revenue and 5,000 stores. The opportunity is too strategic to ignore.

Divest weak banners

Kroger should review every banner and market.

The question should be:

Is Kroger the best owner of this banner?

If the answer is no, sell it, restructure it, or close weak stores.

Kroger should assess divesting or restructuring:

• QFC
• Ruler Foods
• Food 4 Less
• Foods Co
• Mariano’s
• Weak Pick ’n Save, Metro Market, Roundy’s, Jay C, Baker’s, Gerbes, and Pay-Less assets

Kroger should sell or close weak stores in markets where labor costs, shrink, theft, crime, price competition, and weak density make the economics unattractive.

Kroger should protect stronger banners, including Harris Teeter, King Soopers, Fry’s, Smith’s, Ralphs, Fred Meyer, and Dillons.

Harris Teeter is probably the best banner in the Kroger portfolio. Kroger should learn from it, not sell it.

Energy cannot be an afterthought

Kroger spends enormous amounts of money on energy across stores, factories, distribution centers, fuel centers, and logistics.

Energy is rarely discussed, but it affects Kroger’s cost structure, resilience, sustainability, refrigeration, store operations, and long-term capital plan.

Sources have raised concerns about Kroger’s energy function. Foran should audit the energy program and hire a team capable of building a best-in-class energy strategy.

This should include:

• Procurement
• Demand management
• Refrigeration efficiency
• Distributed energy
• Solar where economical
• Backup power
• Utility negotiations
• Store-level energy analytics
• Energy risk management

A serious grocer should treat energy as a strategic cost and resilience issue.

Consultants: clear the decks

Kroger has too many consulting firms coming and going, according to sources.

That creates confusion, duplicated work, and conflicting priorities.

Foran should clear the decks.

Pick one or two primary consulting partners and hold them accountable.

Deloitte appears to have a significant relationship with Kroger and is viewed positively by some sources. Accenture has also played a role in the Capability Center.

That is fine.

But Kroger should not allow a parade of consultants to create more activity.

Consultants should be used to:

• Conduct deep operating analysis
• Support executive decision-making
• Validate project economics
• Benchmark performance
• Assist with implementation
• Audit transformation progress
• Identify cost and productivity opportunities

Consultants should not be paid to produce slide decks that do not change the company.

Kroger should audit consulting fees and performance semi-annually.

Strategic alternatives should be on the table

Foran should tell the board and major shareholders that Kroger will evaluate strategic alternatives.

Not because Kroger must be sold.

Not because Kroger must go private.

Because the board has a fiduciary responsibility to determine whether Kroger’s current structure maximizes long-term value.

The review should include:

• Remaining public and executing the turnaround
• Take-private feasibility
• Full sale feasibility
• Minority investment from long-term capital
• Kroger Health divestiture or JV
• 84.51° / Kroger Precision Marketing monetization
• Kroger Logistics carve-out or minority JV
• Real estate monetization
• Banner divestitures
• Store portfolio restructuring
• Non-core asset sales
• Transportation managed-services options
• Supply chain technology outsourcing or co-managed models

The current structure should not be treated as sacred.

The board’s job is not to preserve Kroger as it exists.

The board’s job is to maximize long-term shareholder value.

The stakes are high

Kroger is not a weak company. It has enormous assets: stores, data, pharmacy, private label, fuel centers, manufacturing, customer relationships, scale, and market density. But assets do not guarantee success. Poor execution can turn scale into complexity.

Walmart will continue pressing price, supply chain, and delivery.

Costco will continue winning trust.

Aldi will continue attacking value.

Amazon will continue using logistics, data, automation, and customer frequency to reshape grocery economics.

H-E-B, Publix, and other regional operators will continue proving that focused grocery operators can beat larger but less disciplined companies.

Foran’s job is not to make Kroger more interesting. His job is to make Kroger more disciplined.

That will require replacing senior executives, refreshing the board, confronting suppliers, repairing vendor relationships, simplifying pricing, rethinking e-commerce, building last-mile capability, imposing AI discipline, restructuring 84.51°, monetizing or partnering Kroger Health, divesting weak banners, auditing technology projects, reassessing transportation management, and eliminating work that does not create value.

It will not be polite.

But turnarounds rarely are.

Kroger does not need another era of big ideas. It needs an era of hard operating outcomes. The shelf must be full. The price must be trusted. The customer promise must be simple. The supply chain must be disciplined. The technology must work. The AI must pay for itself. Transportation must be optimized. The last mile must be controlled. The board must be refreshed. The executive team must be qualified.

That is the turnaround.

Everything else is noise.

Note: Many people at Kroger have reached out to me because of this article. Many of them asked me why I don’t work for Kroger if I care so much about the company? This isn’t about me. It’s about what’s best for Kroger.