Kroger is one of the largest organic food retailers in the United States.
The company is known for steep discounts on certain items and higher prices on its organic fruit and vegetable options.
The difference often leaves their customers confused and annoyed.
Despite its high prices, Kroger was ranked the third most popular grocery store in 2022 by YouGovAmerica, a London-based research data and analytics group.
So what makes Kroger’s products more expensive than alternative retailers like Walmart or Aldi?
Why Is Kroger So Expensive? (10 Reasons)
As with many retailers, supply chain shortages have risen as a result of issues around the globe that have led to production and manufacturing issues.
The rise in transportation costs, technology advancements, and even rising theft as a result of expanding inflation all play a role in the rising costs of grocery and household items at Kroger.
1. Higher Quality Of Meat, Seafood, And Produce
Compared to other grocery retailer options, like Aldi and Walmart, Kroger is known for selling very high-quality meats, seafood, and produce.
These higher-quality foods come at a higher price to the consumer.
Kroger’s organic section in particular is known for having higher prices than most other food products within their retail stores.
As many health fanatics and nutrition lovers can attest, purchasing high-quality, truly organic food comes at a higher price.
Those who regularly shop at retailers that specialize in organic foods have come to expect the price tags attached to those foods.
Additionally, Kroger employs a team of Registered Dieticians who provide nutrition ratings based on “data science, evidence-based nutrition information, and machine learning to rate foods on a simple scale from 1 to 100.”
This team of Registered Dieticians created OptUP, which aids Kroger in obtaining and selling the best quality food possible and rates each product with a visible nutrition rating that their customers can see while shopping.
Members can track their purchases and determine their OptUP score based on the nutrition rating of the food they eat.
2. They Cater To A Wide Variety Of Specialty Diets
Kroger is also known for catering to a wide variety of specialty diets such as keto-friendly, plant-based, soy-free, gluten-free, kosher, and organic.
The company aspires to offer the right foods for every lifestyle.
Obtaining these foods comes at a higher cost to the company in procuring and shipping these items, which in turn raises the shelf price that customers must pay.
In addition, the company offers a variety of recipes on its website to inspire those looking for a new meal within a specific dietary category.
Recipe categories include:
- Chicken and Poultry Dinners
- Pork Dinners
- Vegetarian Dinners
- Seafood Dinners
- Beef Dinners
- Pasta Dinners
Other retailers like Aldi, which are known for providing cheaper options but with less selection, are not able to cater to as wide a variety of dietary needs.
3. Kroger Offers Their Own Store-Brand Products
In addition to offering the best quality foods that can meet any variety of dietary needs, Kroger also offers more options of the same or similar food items for customers.
Included in the wider variety of brands are brands Kroger owns itself, called Our Brands.
The company manufactures and sells its own brands which include dairy, baked goods, and a large assortment of grocery items.
Kroger owns 38 manufacturing plants within the United States to produce and distribute its private brands, which comes at a higher cost to maintain equipment, at least 8,600 employees, and transportation.
This cost is reflected in its shelf prices.
In 2017, the company announced that it now offers more than 30,000 products within its own brands.
These products include:
- Food
- Beauty products
- Personal and Hygiene Items
- Pet items
- Household essentials
Some of Kroger’s most popular Our Brands products include:
- Black Forest Trail Mix
- Simple Truth Original Oatmilk
- Simple Truth Fig & Thyme Crisp Crackers
- Kettle Cooked Cuban Style Sandwich Potato Chips
- Sesame Ginger Shrimp Potstickers
4. Pandemic Disruptions Causing Supply Chain Shortages
As many retailers have been experiencing, certain items are difficult to obtain due to shortages around the world.
Kroger has also been experiencing supply chain disruptions throughout the Coronavirus pandemic which have continued into 2022.
Supply shortages in food items required to manufacture products have led to less quantity within the stores.
In turn, this has also led to an increase in demand as customers can’t find their favorite products.
Many stores, including Kroger, have responded by increasing prices on their food and other products that they are not able to keep in stock.
In addition, some of the national companies that Kroger partners with have still not recovered and reintroduced products they have had to put a pause on the production of.
This has caused the demand for Kroger’s Our Brands products to increase as well.
Our Brands has responded by increasing the variety of products they manufacture to aid in replacing those products not yet available or with low availability.
In particular, the company has grown its Our Brands selection of plant-based, natural, and organic foods to please customers that are prioritizing their health and wellness post-pandemic.
5. Global And Political Problems May Play A Part
Besides the Coronavirus pandemic, other ongoing issues throughout the globe play a role in the supply chain issues.
According to the USDA, Russia and Ukraine are two of the biggest wheat exporters in the world and account for about one-third of exporters.
These countries have experienced challenges in agricultural production and cargo exports.
The shorter supply of wheat means that production costs are higher and therefore food producers must increase their prices.
Additionally, energy and gas prices have risen as a result of sanctions that have been placed on Russian imports of oil, natural gas, and coal.
Manufacturers, farmers, and transportation companies are just a few who are forced to increase their prices as a result.
6. Rising Theft And Its Impact On Shrink Increase
Inventory shrinkage or shrink is what is referred to as the inventory that a store technically owns but is not able to sell.
There are three common reasons for food or other products to not be available to be sold.
The first reason is due to damaged products that must be disposed of by the grocery store.
This damage may occur during transportation or within the store itself.
The second reason is due to food spoiling, which usually happens when a product isn’t sold before its expiration date.
Another way food may spoil prematurely is by transportation trucks that have malfunctioning refrigerators or freezers.
The third reason for shrinkage is due to shoplifting within the store.
Theft in particular has been a rising concern within grocery stores.
As families throughout the country experience financial struggles due to rising inflation and lower incomes, many are forced to feed their families by stealing food from grocery stores when necessary.
Another aspect of shoplifting is employee theft, which may be done out of necessity or ease of access.
Kroger has implemented their own Loss Prevention Strategies and hired a Loss Prevention team to monitor and aid in controlling instances of shoplifting.
Part of their plan includes employees walking throughout the store to help a customer suspected of shoplifting.
This method subtly lets the customer know that they are being watched throughout the store, which hopefully will prevent them from stealing.
If stolen goods exceed $400, the shoplifter is prosecuted in court and could be charged with a felony.
Besides employees monitoring on the ground for potential theft, Kroger has a camera system to monitor shoplifters.
These camera systems allow companies to keep track of shoplifters over a period of time and monitor for recurrences.
Many news stations report that organized crime and theft have played a role in the prices at Kroger, although it has been difficult to obtain an official press release from Kroger stating this.
News stations reporting theft within Kroger’s retailers include CNBC and Winsight Grocery Business.
As one can imagine, purchasing the equipment necessary to successfully monitor an entire store and parking lot is expensive.
Many companies also feel it is necessary to employ a security company to monitor the cameras and provide on-site support on demand.
These are additional costs the company must absorb and may result in increased prices for customers.
7. Grocery Delivery Is Becoming More Common
With the onset of the Coronavirus pandemic, grocery delivery has become an increasingly popular form of obtaining groceries without having to leave the home.
Kroger has utilized this opportunity by forming its own delivery system, which has added fees that sneak up on unsuspecting customers.
However, because of the sense of urgency related to delivery, customers are willing to pay those fees for the benefits.
Another reason for expensive delivery fees is the extensive network required to manage and operate online orders effectively and on a timely basis.
According to a press release, the delivery network Kroger operates is made up of highly automated fulfillment centers.
In the centers, more than one thousand robots move throughout a maze of 3D grids and are operated by a control system.
Within these fulfillment centers are totes that hold grocery items.
As online orders are placed for delivery, the robots move throughout the fulfillment centers to pick up the items and sort them for delivery.
These powerful machines, as well as the infrastructure required to operate them, are expensive.
There are only a limited number of fulfillment centers, operating in Ohio, Florida, Georgia, Wisconsin, Texas, and Michigan.
The company plans to open more centers within the states of California, Maryland, Arizona, North Carolina, Colorado, southern Florida, and other areas within the Northeast as the company expands.
8. Transportation Costs Have Increased
In recent years, the cost of transporting goods across the country and internationally has increased exponentially.
Food products that came from other countries, like Mexico, must surpass the requirements set by the United States Customs and Border Protection.
Additionally, if products are being shipped overseas there are additional costs to obtain space on ships.
Many agricultural products are not allowed entry into the United States due to the potential for pests or animal diseases.
This may include meats, fresh fruits, vegetables, plants, and seeds.
Another aspect of transportation within the United States that is important to remember is the refrigerated trucks used to keep products fresh.
These trucks must have the technology to keep products at the appropriate temperature for the entire duration of transportation time.
These trucks also require professional drivers, and like many industries are experiencing, finding employees is a challenge in the post-pandemic time.
Truck drivers in particular have been scarce and existing trucking companies are working overtime to load and unload goods to their destinations as fast as they can.
In addition to the low number of truck drivers to transport the goods, rising fuel costs also play a role in the price trucking companies charge for their services.
9. Kroger Takes Advantage Of Holidays And Events
Every year, Kroger announces their fall food trends.
Customers have access to this analysis within press releases found on their website.
The company uses this analysis to predict trends in sales, customer behavior, and popular items.
This can play an impact on their prices as the demand for certain products increases.
In 2022, Kroger announced that they are expecting football season and Halloween to increase their customer base as fans sought out tailgating treats such as chips, soft drinks, dips, salsa, hot dogs, and beer.
Kroger states that Halloween is their biggest cupcake-selling time of the year.
When the weather cools and customers begin to enjoy the fall season, the company has a hard time keeping pumpkin spice-flavored products on the shelves.
They take advantage of their consumer’s demand by increasing the number of products that fill a niche, such as:
- Pumpkin Spice Eggnog
- Pumpkin Spice Creamer
- Pumpkin Glazed Egg Donuts
- Pumpkin Pie Ice Cream
- Pumpkin Chocolate Chip Cookies
10. The Boost Membership Encourages Consumers To Spend More Money
Like many stores and companies, Kroger has their own membership service called Boost.
This membership has three levels for customers to choose from.
The first level, Kroger Plus, is a free membership and the member receives:
- 1x fuel points per $1 spent
- Digital coupons
- Weekly specials
- Online grocery order
The second level, Boost $59 per year allows the member to receive:
- 2x fuel points per $1 spent
- Digital coupons
- Weekly specials
- Online grocery order
- $100+ in savings on Kroger’s specialty brands
- Free next-day delivery
Lastly, the third level is Boost $99 per year which allows the member to receive:
- 2x fuel points per $1 spent
- Digital coupons
- Weekly specials
- Online grocery order
- $100+ in savings on Kroger’s specialty brands
- Free next-day delivery
- Free delivery in as little as 2 hours
Without a doubt, the Boost membership has its advantages.
However, some limitations encourage the customer to spend more money to receive the benefits of the membership.
For example, for the third level of Boost members to receive free two-hour delivery they must spend a minimum of $35 and the delivery time estimate is not guaranteed.
Additionally, the potential to earn savings and points to use in the future is a motivator for many to increase their spending.
