Is Rising Inflation Causing Grocery Stores to Close?

kroger stock chart

Some big-name grocers have closed down stores with a backdrop of record-breaking inflation. As an investor, this concerns me because I was looking for “safe” places to put money. Currently, Kroger (NYSE: KR) is doing well when compared to the S&P 500, but rising inflation may be catching up to the stock.kroger stock chart stocks like 

According to Reuters, Walmart closed three locations that were not performing in April in Louisville, Cincinnati, and Bellevue in Washington. Whole Foods announced that six Whole Foods stores would soon close, including those in Chicago, Alabama, and California. Kroger has already closed two locations in Kentucky and Mississippi that were not performing in 2022 and will be moving a third. Piggly Wiggly announced the closing of many stores in 17 states where it operates.

The closure of Whole Foods’ location in Chicago’s Englewood neighborhood, on Chicago’s South Side, was particularly controversial. The Chicago Sun-Times reported, that the store was opened with great fanfare six years ago. Stephanie Coleman, the Alderwoman, described the chain’s decision not to close the store in a negative light. It was reneging upon its neighborhood commitment and eliminating its only source for fresh food and produce.

Amazon.com did not disclose if financial performance was a factor in closing Englewood and another Lincoln Park neighborhood home. However, Whole Foods reported its first quarterly loss since 2015.

Because of the inflationary economy, grocers may need to look more closely at individual locations’ profitability. Inflation means higher costs for suppliers. This makes it harder for retailers to protect their margins and leads them to take cost-cutting steps.

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This news comes just a few months after local grocers reported that inflation had already forced them out of business.

An NBC Bay Area Report stated, Community Foods Market had to close in West Oakland, CA in February due to inflation. The business was hit hard by inflation and related costs. It was first affected by lower foot traffic during the pandemic, then supply chain disruptions that led to shorter orders and delays in delivery from suppliers.

Experts had predicted significant store closings across the U.S. Retail Landscape, even before the pandemic and the ensuing inflation.

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