Feb 15, 2021
Kroger announced that it is closing two of its Long Beach, California stores, a Ralphs and a Food 4 Less. The city council for Long Beach voted to require grocery stores to pay their workers an extra $4 an hour as hazard pay for 120 days, due to the pandemic, so that was Kroger’s response.
Kroger, with its 2,750 supermarkets and multi-department stores, is the United States’ largest supermarket by revenue and the second-largest general retailer, behind Walmart. And last year it profited handsomely from the pandemic, doubling its profits to $2.66 billion in 2020 from $1.33 billion a year earlier. One big reason was that Kroger imposed big price increases.
Kroger poured those profits into the bank accounts of its biggest shareholders. Kroger increased its shareholder dividend by 13%. And the company also purchased nearly $1 billion of its own stock, causing its stock price to rise about 28% over the last 12 months, much higher than the 18.2% rise in the Standard & Poor’s 500 index that represents 500 largest US companies.
Of course, Kroger executives did flatter its workforce. “Our Kroger family of associates have been nothing short of incredible during the pandemic and they continue to inspire me every day, serving our customers when they need us most” during the pandemic, said Kroger Co. Chairman and Chief Executive Rodney McMullen.
But when it comes to permanent hourly wages, Kroger pays little more than the minimum wage, $16 to $18 on average, to its frontline workers.
By announcing that it will close the two stores, Kroger’s is making clear that to keep such profits going, Kroger will not yield to any city ordinances. Clearly, it will boil down to a fight by Kroger workers for better pay. It’s the only way to put a wrinkle in this mega-food chain’s plan.