Kroger is adjusting its pricing, private-label and product strategies after consumer spending shifted toward competitors and lower-income households reduced purchases. The grocery retailer reported softer second-quarter sales and lowered its 2026 identical-sales outlook, while stronger private-label demand provided a source of growth as shoppers became more selective about household spending.

Key Takeaways

• Kroger lost more than $12 billion in CPG spending to Amazon, Walmart and Costco over the past year, according to Numerator data cited in the report.
• CPG spending at Kroger and Ralphs declined by $715 million and $516 million, respectively.
• Lower-income Kroger households reduced CPG spending by 5.2% year over year.
• Kroger’s Private Selection sales increased more than 14% during the second quarter.
• Kroger lowered its 2026 identical-sales growth outlook to 0.2%–0.8%, excluding fuel.

Kroger Reports Shifts in Consumer Spending

Kroger consumer spending has shifted toward Amazon, Walmart and Costco, with the grocery retailer losing more than $12 billion in consumer packaged goods spending to those competitors over the past year, according to Numerator data cited in the report.

The shift affected individual Kroger store banners differently. CPG spending at Kroger stores declined by $715 million, while spending at Ralphs stores fell by $516 million over the same period.

Customer visits also declined at those banners. Kroger recorded 9 million fewer trips than a year earlier, while Ralphs recorded 5.5 million fewer trips.

The spending changes extend beyond grocery staples. Spending on household products, including laundry, cleaning and dishwashing supplies, declined by $97 million. Health and beauty spending fell by $178 million during the same period.

Spending on grocery staples such as canned goods, beverages and candy increased by $800 million. The data also showed stronger spending on fresh-food private-label products, which increased by $420 million over the past year.

Kroger’s second-quarter results showed limited sales growth despite those areas of strength. Identical sales excluding fuel increased 0.2% year over year during the quarter, according to the company’s earnings report.

Separate Placer.ai data found that visits to Kroger stores increased 0.5% year over year during the second quarter. The increase in visits did not translate into stronger overall identical-sales growth, indicating that customer traffic and spending levels moved differently during the period.

The spending figures follow a separate U.S. retail report showing that retail and food-service sales fell 0.6% in July from June, although sales remained 5% above the same month a year earlier. 

CPG Spending Moves Toward Major Retail Competitors

The Numerator figures show that the change in spending involved several major retail competitors rather than a single destination. Amazon, Walmart and Costco collectively captured more than $12 billion in CPG spending that previously went to Kroger, according to the reported data.

Kroger’s regional supermarket network includes banners such as Ralphs, Fred Meyer and Smith’s. The company is responding to the spending changes through pricing, loyalty and product strategies intended to give customers more value within its stores.

Lower-Income Households Reduce Kroger Purchases

Lower-income households accounted for a substantial portion of the spending reduction. Kroger added more than 1 million high-income households during the past year but lost 700,000 lower-income households, according to the reported Numerator data.

Among lower-income Kroger shoppers, CPG spending declined 5.2% year over year. Those households also made 30 million fewer trips than a year earlier.

The reported data placed the resulting spending gap at $1 billion among lower-income households. The figures provide a separate measure of the pressure on Kroger’s sales beyond the overall shift in CPG spending to competing retailers.

Kroger CEO Greg Foran addressed household spending during the company’s September 11 earnings call. He said customers remained under pressure and that the conditions had affected the grocery industry.

Foran cited reductions in SNAP benefits, higher fuel prices and softer consumer confidence as factors affecting household budgets. He said customers were still visiting stores but were being more disciplined about their purchases.

The University of Michigan’s preliminary September Survey of Consumers also showed a decline in consumer sentiment. The preliminary index fell four points from the previous month.

A separate measure from the Conference Board showed U.S. consumer confidence falling to 89.4 in August from 90.2 in July, the lowest reading in seven months. 

The consumer data provides context for Kroger’s sales performance, while the reported spending changes are specific to the retailer’s customer base and product categories. Kroger is responding by placing greater emphasis on price and value.

Private-Label Sales Provide a Source of Growth

Kroger’s private-label business recorded stronger sales even as overall sales growth remained limited. Private Selection sales increased more than 14% during the second quarter, according to Foran.

Foran said the increase was driven by customer response to new products, including ready-to-heat and ready-to-eat meals. Kroger’s brand portfolio also grew faster than national brands during the quarter.

Private-label performance gives Kroger an area of sales growth while consumers seek lower price points. The company sells private-label products through brands including Private Selection and Simple Truth.

The reported increase in fresh-food private-label spending was another area of growth. Customer spending on those products increased by $420 million over the past year.

Kroger is also responding to customer interest in natural and organic products. Foran said the company saw strong engagement in those categories and was expanding its assortment across stores.

The combination of value-oriented products and natural and organic offerings gives Kroger multiple ways to address different purchasing priorities. The reported sales figures show stronger performance in selected private-label and fresh-food categories while other household and personal-care categories recorded declines.

Kroger Expands Its Value-Focused Strategy

Kroger has made pricing a central part of its response to customer spending changes. Foran confirmed plans in May to reduce prices on thousands of products across its stores.

The company also introduced additional gas savings in March and refreshed its loyalty rewards program with simplified offers. Those changes are intended to give customers more direct savings when they shop through Kroger’s stores and loyalty channels.

Kroger is expanding its Smart Way value brand by adding more products and increasing its visibility in stores and online, according to Foran.

The retailer is also working with suppliers to reduce prices. Foran said Kroger was using cost savings and tariff refunds to support lower prices for customers.

Kroger’s pricing response follows similar value-focused measures among other major retailers. Walmart and Target have also reported lower-price initiatives as shoppers pay closer attention to value. A recent report on value-focused retail strategies examines how major retailers are responding to more selective purchasing behavior. 

The pricing strategy addresses the spending pressure identified in the second-quarter results. Kroger’s sales growth remained limited while the company reported changes in household composition, shopping frequency and spending by product category.

The company’s approach also includes maintaining products that appeal to shoppers seeking health-oriented choices. Foran said customers continued to prioritize their health and that Kroger was expanding its natural and organic assortment.

The combination of price reductions, private-label products, loyalty offers and expanded assortments represents the main components of Kroger’s response to the reported consumer spending changes.

Kroger Lowers Its 2026 Sales Outlook

Kroger lowered its full-year 2026 identical-sales outlook excluding fuel to a range of 0.2% to 0.8%. The previous forecast called for growth of 1% to 2%.

The revised outlook follows the company’s 0.2% increase in identical sales excluding fuel during the second quarter. Kroger’s reported results therefore show sales growth at the lower end of its revised annual expectations.

Foran said during the earnings call that pressure had increased in the second quarter compared with the first quarter. He also described the consumer environment as tighter as shoppers became more disciplined with their spending.

The revised forecast places greater weight on Kroger’s efforts to attract customers through lower prices and value-oriented products. Private-label sales provide one source of growth, while spending declines among lower-income households remain a challenge.

Kroger’s sales outlook also reflects differences across product categories. Spending increased on canned goods, beverages and candy, while household products and health and beauty products recorded declines.

The retailer’s response includes additional Smart Way products, expanded private-label offerings and continued investment in natural and organic products. Kroger is also using its loyalty program and gas savings offers to provide additional value to customers.

The combination of these measures will shape Kroger’s response to the spending changes reflected in its latest sales data.

Frequently Asked Questions

Why is Kroger losing consumer spending to competitors?

Kroger lost more than $12 billion in CPG spending to Amazon, Walmart and Costco over the past year, according to the reported Numerator data. Lower-income households also reduced their Kroger spending and made fewer store trips.

How much CPG spending has Kroger lost?

More than $12 billion in CPG spending shifted from Kroger to Amazon, Walmart and Costco over the past year. Kroger stores accounted for a $715 million decline, while Ralphs recorded a $516 million decline.

How are lower-income households changing their Kroger purchases?

Lower-income Kroger households reduced CPG spending by 5.2% year over year. The group also made 30 million fewer trips than the previous year.

How are Kroger private-label brands performing?

Private Selection sales increased more than 14% during the second quarter. Kroger also reported that its overall brand sales grew faster than national brands.

What is Kroger’s 2026 sales outlook?

Kroger expects identical sales excluding fuel to increase between 0.2% and 0.8% in 2026. The company previously forecast growth of 1% to 2%.