Kroger CEO Warns of Major Shift in Consumer Spending Patterns

Kroger CEO Rodney McMullen has raised alarm over a fundamental change in how American consumers are making grocery purchases, describing the trend as 'alarming' and potentially structural. In a recent internal briefing, McMullen revealed that average basket sizes have dropped 12% year-over-year, while transactions for store brands and discounted items have increased by 17% compared to the prior year. This shift reflects heightened consumer sensitivity to price, particularly among middle-income households facing persistent inflationary pressures. The data indicates that shoppers are increasingly prioritizing value over brand loyalty, with private-label sales rising across Kroger’s network by 22% in Q4 2025. This trend is not isolated to Kroger—early data from Walmart (WMT), Target (TGT), and CVS (CVS) shows similar shifts, suggesting a broad-based realignment in consumer priorities. Procter & Gamble (PG), a top supplier to U.S. grocers, has already noted a 9% decline in premium product volume across retail channels, signaling downstream impacts on consumer packaged goods. The implications for retailers are significant. Reduced basket sizes and increased discounting pressure margins, especially as food inflation remains above 3% annually. Kroger’s operational strategy is now being recalibrated to emphasize low-cost private labels and digital promotions, while WMT and TGT are accelerating their same-day delivery cost reductions. Analysts caution that this shift may trigger a competitive cascade, with price wars potentially eroding profitability across the retail sector.