Kroger is searching for a new chief executive at a time of deep restructuring across the company. The grocer has announced nearly 1,000 corporate job cuts, plans to close about 60 underperforming stores, and a review of non-core assets following the collapse of its $25 billion merger with Albertsons. Interim CEO Ronald Sargent has said the company will redirect savings toward lowering prices, opening new locations, and expanding store-level employment — even as it accelerates investments in artificial intelligence to improve efficiency and customer experience.
The leadership transition began after longtime CEO Rodney McMullen resigned earlier this year, following a board investigation into personal conduct unrelated to business operations. His departure came just months after regulators blocked Kroger’s proposed acquisition of Albertsons on antitrust grounds which McMullen had defended as essential to competing with Walmart, Costco, and Amazon. The merger’s collapse has left Kroger reassessing its long-term growth strategy while managing investor pressure to deliver results through operational discipline and technology adoption.
Interim CEO Sargent, formerly the chairman and CEO of Staples, told analysts in September that Kroger’s path forward depends on “lowering costs and modernizing operations.” The company reported net income of $609 million for the second quarter ended August 16, up from $466 million a year earlier, with cost controls and early returns from automation cited as key contributors.
Artificial Intelligence at the Core of Modernization
Artificial intelligence has become a central component of Kroger’s turnaround efforts. The company’s data and analytics arm, 84.51°, under the leadership of James Kalmbach, manages insights from more than 150 million customer touchpoints and powers 1.9 billion personalized coupons each year. “We invest in data to support AI, and use AI at the service of the business,” Kalmbach said.
Kroger’s personalization science underpins every stage of the customer journey, from promotional emails to cart recommendations. Its “Start My Cart” feature generates roughly 500 billion recommendations annually, making online basket-building nearly 4.5 times faster than in previous years. Behind the scenes, AI-driven dynamic batching tools analyze more than 200,000 totes per second to build efficient pickup routes, reducing order lead times and associate walking distance by 10 percent in high-volume stores.
Sargent said these technologies are improving both customer convenience and store productivity. “Artificial intelligence is one of the key tools to help us get there,” he noted on the company’s September earnings call. “Where we’ve implemented AI in different parts of the organization, we’re seeing results with more competitive pricing, shrink improvements, and faster fulfillment, which enables two-hour pickup for customers.”
From Data to Operations
Beyond personalization, AI is reshaping Kroger’s operations. The company has partnered with the U.K.-based Ocado Group to open eight AI-enabled robotic fulfillment centers, with two more planned for Charlotte and Phoenix. Each site integrates machine learning, robotics, and predictive demand systems designed to optimize inventory and delivery timelines.
Kroger has also rolled out AI tools within its 84.51° data division to combat shrink — a term for lost or damaged inventory that directly affects profitability. “We’ve deployed an AI tool specifically against shrink,” said CFO David Kennerley, explaining that it helps the company track sell-through at the store level and uncover new sales opportunities, particularly for seasonal items.
Meanwhile, Kroger’s online marketplace, powered by Mirakl and analytics provider Intelligence Node, uses AI to manage product listings, optimize search results, and enhance seller content. “From product copy and ratings to reviews and taxonomy, customers are searching out more information than ever before, and providing what they need, when they need it, is important,” said Michael Murphy, group vice president at Kroger.
Technology Meets Restructuring
Even as technology becomes the backbone of its operations, Kroger continues to streamline costs. The company has begun reviewing non-core assets and closing stores that no longer meet profitability benchmarks. Sargent said the adjustments are “necessary for the company’s long-term success,” describing them as part of a broader plan to focus resources on priorities that directly support customers and shareholders.
Some analysts, however, question whether Kroger’s growing emphasis on retail media and data monetization risks diverting attention from its core grocery operations. R5 Capital CEO Scott Mushkin told Grocery Dive that the company has been “bumping along rather than thriving,” suggesting that its value proposition has become less clear to consumers. “It’s very difficult when you’re multi-banner, multi-regional, with different go-to-market strategies, to define what you are,” Mushkin said.
Searching for the Next Leader
Kroger’s current management has been explicit about the purpose of the cost actions. “We will continue to aggressively look for ways to reduce costs throughout the company,” interim CEO Ron Sargent told analysts, adding that those savings are being redirected toward “lowering prices, opening new locations and creating store-level jobs.” That sits alongside the earlier decision to close about 60 underperforming stores and eliminate nearly 1,000 corporate roles as part of a broader review of non-core assets.
On the technology side, Kroger leaders have framed AI as an extension of its long-running data strategy rather than a separate moonshot. James said the organization is “in the midst of a once-in-a-lifetime global re-platforming” and that work is prioritized toward AI initiatives “with the greatest impact on unlocking Kroger’s strategies.”
Operationally, Kroger is also testing in-store automation. The retailer has piloted inventory robots such as Simbe’s Tally and Badger Technologies’ units in about 35 locations to track availability and pricing in real time, a move the company has described as a test-and-learn program. At the same time, Kroger expanded its relationship with Uber Eats to make it easier for customers to shop, save, and order meals, reinforcing the digital side of the business alongside its AI-powered pickup and fulfillment improvements.
