Dive Brief:

• Kroger has laid off hundreds of local managers across its divisions, a source familiar with the matter confirmed to Grocery Dive.
• A spokesperson for the grocer wrote: "As part of ongoing talent management, many store operating divisions are evaluating middle management roles and team structures with an eye toward keeping resources close to the customer. Store divisions operate independently but all of them are taking steps to ensure they have the right talent in the right store leadership positions."
• Kroger employs about 450,000 employees across 20 divisions. Last month, the company announced it would not hit $400 million in incremental operating profit by 2020 as part of its Restock Kroger turnaround plan.

Dive Insight:

Kroger is on a path toward transformation, but until it gets there — if it gets there — it faces considerable challenges to its everyday business.

The company aims to cut $1 billion in operational costs annually, CEO Rodney McMullen noted during Kroger’s second-quarter earnings call last month. As it evaluates the entirety of its business, the retailer clearly felt local management needed to be winnowed down.

The exact number of employees laid off was unclear, though anonymous posts from impacted workers posted on TheLayoff.com indicated cuts ranging from Atlanta to Los Angeles and Kroger's Roundy's division in the Upper Midwest. The posts also indicated a change to the structuring of district management, though what those changes are exactly remain unclear. Kroger will update its long-term Restock outlook and strategy during its investors' day Nov. 5.

As its core grocery business struggles to compete with alternative formats on assortment and pricing, Kroger has turned to alternative investments aimed at providing millions in added revenue. This includes so-called "margin-rich, asset-light" services like CPG marketing and leasing store technology.

In addition, Kroger is betting big on e-commerce with its investment in 20 massive, automated sheds built by Ocado that are starting to go up across the country.

Kroger has preached patience with its turnaround. "Transformation is incredibly difficult," McMullen said during last month's earnings call. The canceled guidance for 2020, however, indicates that turnaround isn't going as well as the company had planned. With this latest round of layoffs, the stakes for Kroger to succeed are getting higher and higher.