Dive Brief:
- Kroger will hire 11,000 employees across its family of stores, including 2,000 managers, according to a news release. The move will increase the company’s total workforce by roughly 2%.
- The grocer added 10,000 jobs last year, though as The Wall Street Journal notes, it also cut 1,300 corporate positions. In 2016, Kroger added 12,000 employees to its workforce.
- Kroger also will spend $500 million during the next three years to increase wages and improve worker training and development. Earlier this year, the company ratified an agreement with United Food and Commercial Workers Local 75 to increase starting pay for store employees to $10 in the Cincinnati and Dayton markets.
Dive Insight:
Adding roughly four new workers to each of its 2,800 stores is a costly move for Kroger — especially considering the intense competition and margin pressure the country's largest conventional supermarket chain is facing right now.
But the company got a boost from the recent tax overhaul, which will save it an estimated $400 million per year. Kroger executives have said they will use roughly a third of that amount on its workers, including raising starting pay.
It’s also a necessary expense as Kroger seeks boost its store services as well as its ClickList pickup program. In recent months, the grocer has curbed its store growth and focused on improving the experience at its existing stores.
More workers will be needed to assist customers in key departments such as the deli and bakery, to refresh shelves and execute effective store promotions. As more shoppers migrate online, Kroger will need more workers picking and packing orders. The grocer is wise to prepare for that growth now rather than scramble later on when doing so in a rush could hurt the company's web presence.
A tight labor market will challenge Kroger’s mission to gain and retain workers. Unemployment is hovering just above 4% right now, and competitors are offering better pay and perks. Target recently announced it will raise its starting hourly rate to $12, with plans to increase that to $15 an hour by 2020. Meanwhile, Walmart said in January it would raise its starting pay to $11 an hour, and expanded its maternity and paternity leave.
Kroger’s deal with UFCW workers in Ohio could serve as a model for upcoming wage increases. Certainly, the retailer doesn’t want to fall behind Target and Walmart.
Kroger’s stock is down around 14% this year as investors remain wary of competitors, notably Amazon. But Kroger’s Restock program, which seeks to leverage the company’s advantages in technology, data and private label while also making strategic investments, seems to have stabilized the company after a difficult 2017. If it can succeed in personalizing the store shopping experience and remain a leader in e-commerce, it could very well return to the stellar growth trajectory that was on display just a few years ago. To do that, Kroger will need a customer-friendly workforce, which the company is taking into account with the upcoming hires.
