Supermarket chain Kroger (NYSE: KR) has decided to offer some employees — those not directly working on its store floor — voluntary retirement packages.
The offer comes as the company has been engaged in what it calls its “Customer 1st Strategy,” an ongoing effort to control costs in areas customers don’t see in order to invest in consumer-facing departments. Approximately 2,000 workers qualify for the program, but the company did not discuss its expected or hoped for results.
“Kroger would not be the successful company it is today without the incredible efforts of all of our associates. We believe a generous Voluntary Retirement Offering is in line with our company values and recognizes the long careers many of our associates have had with Kroger,” said CEO Rodney McMullen in a press release. “Kroger is committed to our operating model of lowering costs to invest in the areas that matter most to our customers.”
How much will this save?
The voluntary retirement offer has gone out to back-end employees who meet age and years of service criteria. In-store and district associates, senior officers, and supermarket division presidents are not included in the offer.
As the company noted in its press release, how much it might save from the voluntary retirements will depend on how many people sign up for the offers between now and the early March acceptance deadline. Kroger will release the expenses related to the deal in in its first quarter fiscal 2017 earnings report. The company also pointed out that its initial guidance on fiscal 2017 did not account for any changes due to making this offer.
Why is Kroger doing this?
The company wants to save money, but it also wants to shift more of its overall staffing into customer-facing jobs. In theory, it could move actual workers, but a back-office accountant, for example, is unlikely to want to move into a store-based role.
As a company with a generally good reputation as an employer, Kroger is being careful to not change that by laying people off. Instead, it’s making changes by attrition, and using this deal to help encourage things along by giving people who may want to retire more incentive to do so.
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