Kroger accelerates direct sourcing efforts for better cost control, visibility

The grocery chain seeks to boost first-party procurement volumes to more than 10% while working toward a fully owned import and distribution model.

Kroger is building up its logistics, sourcing, workforce and payment capabilities to get closer to producers and “take layers out of the chain,” Kennerley told investors. CEO Greg Foran first outlined the strategy earlier this year, telling analysts in June that the grocery chain was leaning on supplier negotiations and prioritizing direct sourcing to reduce the cost of goods.

For instance, Kroger is currently working with a grape grower in Peru and has sourced about 40% of its fruit for the November 2026 season directly from growers in the country, Kennerley said.

“Previously, we would have paid margin to a third party to sit between us and the grower,” Kennerley said. “And by doing this ourselves, we use Kroger's scale to get closer to the grower, which lowers costs, strengthens access to supply and gives us a more direct line to innovation.”

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