Why The Kroger CEO Blames Higher Food Prices On 'Organized Crime'

Kroger is easily one of the most well-known chains in the country, with over 2,500 outlets in the U.S. It has a rich history. Per the brand's site, its founder, Barney Kroger, decided to use all his savings to start a grocery store business in 1883. His mission was to be authentic and only sell products that he would be tempted to buy himself.

The brand continues to innovate and prioritize customers. Earlier this year, Kroger declared that it will focus a lot more on digital platforms (via Supermarket News.) "By digital, we mean the Kroger seamless ecosystem we've built over the past few years to be able to deliver anything, anytime, anywhere regardless of channel, whether pickup, delivery, or shipped," said Kroger CEO Rodney McMullen.

Despite being such a supermarket giant, Kroger isn't a stranger to obstacles. McMullen recently spoke about how organized crime is negatively impacting the company and its customers (via Cincinnati Business Courier).

Kroger isn't giving up

According to the Cincinnati Business Courier report, Kroger's gross margins went down by 0.6 percentage points. Alarmingly, 25% of the "decline in gross margins" was attributed to theft. Speaking about the issue, McMullen said that he's aware that Congress and others are trying to resolve the issue and understand it.

Per Wish TV, Kroger has no option but to increase food prices 2-3%, which is definitely higher than what the team anticipated earlier. Other reasons for this include an increase in supply chain costs and higher food prices in general. However, Kroger will do its best to try and retaliate against "organized crime." "Our general counsel is also working with some trade associations to try to start working on it in a broader group, not just Kroger-specific, when you look at organized crime," said the company's chief financial officer, Gary Millerchip.

Stealing isn't just restricted to stores, by the way. It's also happening in places like delivery trucks, as per Cincinnati Business Courier. "We do believe it'll be important to partner with the government and the way products are able to be sold in the marketplace," McMullen added. He expects that it will take time to completely address the issue.