America’s biggest supermarket chain plans to take on Costco and Walmart with major price cuts

America’s biggest traditional grocery chain plans to slash prices on thousands of everyday items as it fights to win back shoppers from rivals Walmart, Costco, Aldi and Amazon.

Kroger CEO Greg Foran said the supermarket chain is laying the groundwork for major price cuts as inflation-weary consumers increasingly prioritize value when buying groceries.

The move marks one of the biggest strategic shifts for Kroger in years and comes as shoppers are squeezed by rising gas prices, stubborn inflation and broader economic uncertainty.

‘The reality is, the basket has to come down,’ Foran told Bloomberg News in his first major interview since becoming CEO in February. 

Kroger, which operates 21 regional grocery chains – including Fred Meyer, City Market, Ralphs, Harris Teeter and King Soopers – generates nearly $150 billion in annual revenue and remains the largest supermarket operator in the US.

But despite its enormous footprint, the company has steadily lost ground to retailers that have built their reputations around low prices and convenience – particularly Walmart and Costco, which have continued attracting middle-class shoppers looking to stretch household budgets further.

Foran compared the grocery battle to a Formula One race, admitting Kroger currently sits behind the industry leaders.

‘There’s a lead group of cars that are doing a very good job,’ he said. ‘Our objective is to get out of the midfield and start lapping faster.’

The retailer plans to test price reductions before expanding them more widely across stores nationwide. 

Executives say the cuts will affect thousands of products rather than isolated promotions or temporary discounts.

To fund the lower prices, Kroger is looking internally for savings. 

Foran said the company plans to reduce costs by importing more merchandise directly, streamlining operations and using technology more efficiently before reinvesting those savings into cheaper shelf prices.

The strategy mirrors tactics already being deployed by Walmart, which recently revealed it had reduced prices on around 7,200 items – more than 20 percent higher than a year ago.

Walmart executives said low prices are continuing to help the retail giant gain market share across all income groups, especially as consumers become more cautious about discretionary spending.

Foran acknowledged Kroger is facing a particularly challenging environment as shoppers grow more nervous about rising living costs.

‘Consumers are wary of what they’re seeing at the gas pump,’ he said. ‘They’re wary of some of the commentary about what might be coming down the line.’

The pressure on grocery retailers has intensified in recent months as Americans pull back on spending across many categories. 

Industry analysts say consumers are increasingly shopping around, buying store brands, hunting promotions and splitting trips between multiple chains to save money.

Discount-focused retailers have been some of the biggest winners. Costco continues drawing shoppers with bulk bargains and low-priced essentials, while Aldi and Trader Joe’s have expanded aggressively across the country.

Kroger is now attempting to reposition itself as both affordable and more customer-friendly under Foran, who is credited with helping revive Walmart’s US stores before leaving in 2020 to run Air New Zealand.

During his time at Walmart, Foran became known for aggressively focusing on lower prices, cleaner stores and fresher food – strategies Kroger now hopes to replicate.

The company has internally developed what Foran calls the ‘Five Fs’: fresh, fast, affordable, friendly and ‘for you,’ with the final category focused on more personalized shopping experiences tailored to local communities.

Kroger is also planning a major expansion push. 

The company expects to open between 70 and 80 new stores next year – roughly double the number opening in 2026 – while continuing to invest heavily in e-commerce and delivery operations.

The expansion will target fast-growing regions including Texas, Florida and the Carolinas, while Kroger also sees opportunity to strengthen its presence in the Northeast.

The renewed focus on affordability comes after a turbulent period for the company. 

Kroger’s proposed merger with rival Albertsons collapsed following regulatory opposition, while longtime CEO Rodney McMullen abruptly departed last year.

Now, the company is trying to reassure investors and customers alike that it can compete in a grocery market increasingly dominated by discount giants.

Retail analysts say the challenge for Kroger will be balancing lower prices with already-thin grocery profit margins. 

Supermarkets traditionally operate on much tighter margins than warehouse clubs or big-box retailers, making sustained price wars difficult.

Still, Foran insists Kroger must adapt to changing consumer behavior if it wants to regain momentum.

‘Our objective is to execute what we think is a very clear, sensible plan,’ he said. ‘We want to be America’s best grocer.’