Kroger’s deft move to close roughly 60 underperforming stores while opening 30 new locations and reconfiguring existing layouts is part of a forward-looking plan for operations, profitability, and the ability to adapt to changing consumer preferences. Near-term impacts notwithstanding, the Krogers’ reinvestment scheme has drawn local ire regarding two high-profile closures.
A bold network optimization
In June, interim CEO Ronald Sargent announced the decision to close approximately 60 stores during an 18-month period, or about 2% of its 2,730-store network. This decision followed a two-year hiatus on store evaluations during the stalled Albertsons merger process. The closures serve to rid the company of those locations that are underperforming, while at the same time, cost-cutting measures and capital reallocation will focus on higher-return opportunities.
Simultaneously, Kroger took a hundred million- dollar impairment charge related to the closures; however, its premises project “modest financial benefit” through redirecting savings to enhance remaining stores and accelerate growth initiatives.
Opening 30 new stores: Focus on growth markets
Regardless of closures, Kroger emphasized continuing expansion with 30 larger store projects being completed by the end of 2025. The emphasis here will be on high-growth areas and competitive markets—specifically the large-format Kroger Marketplace model. Marketplace stores merge groceries with general merchandise, fresh departments, and services—all aimed at being one-stop shopping destinations and combatting discount competitors such as Walmart.
According to CFO David Kennerley, optimization of the store network and ramp-up of new-store development are integral to improving return on invested capital (ROIC) and sustaining long-term growth.
Layout changes: Enhancing the customer experience
Beyond net store count, Kroger is reorganizing store interiors in an overhaul meant to drive efficiency and shopper satisfaction. The company focuses on:
- Efficient fixtures and signage: Streamlined aisles and clearer wayfinding to reduce in-store friction.
- Fresh and specialty departments: Expanding delis, bakeries, and ready-to-eat sections to respond to rising at-home meal preparation and convenience demand.
- Faster construction techniques: Standardized modular designs enable quicker remodels and consistent brand experience across banners.
These layout upgrades aim to increase basket size, speed up shopping trips, and highlight Kroger’s private-label offerings, which have outpaced national brands for seven consecutive quarters.
Backlash over two specific closures
While Kroger frames its store closures as a necessity, the affected communities have opposed them vehemently, particularly Abingdon, Virginia, and Charlottesville, Virginia.
- Abingdon, Virginia: Residents of Abingdon generated a petition with over 1,500 signatures urging Kroger to reverse its closure decision. Local residents argued that their store was an essential food-access point in a semi-rural area without alternative full-service grocery options. “If you leave, you are creating a huge hole in our community,” one signer warned, expressing fears of longer travel times for senior citizens and low-income families.
- Charlottesville, Virginia: Likewise, the imminent closing of the store in Charlottesville catalyzed meetings in the community and local press reporting. Customers cited the relationships they enjoyed with employees and complained the closure would contribute to “food deserts” in certain neighborhoods of the city. Though Kroger pledged to the involved associates employment at nearby facilities, villagers are concerned about dwindled job security and longer travel to work.
Balancing efficiency with community trust
By closing unprofitable outlets while reinvesting in new stores and layout improvements, Kroger is walking a tightrope of sorts: trimming excess to free up capital to use against competitors in a low-margin sector. Its future success will depend on the ability to remodel stores with an attitude of goodwill in the communities that have lost or will lose Kroger stores.
If Kroger takes on markets with high returns, delivers improved store experiences, and reinvest wisely, it will become leaner and swifter, ready to seize market share while wrestling with reputational scars for closing retail stores in the neighborhoods for so long.
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