Kroger PESTEL Analysis

Political factors exist in the external environment that might affect Kroger's brand image, performance, and sustainability. Government regulatory changes and tax legislation affecting large corporations could impact Kroger positively or negatively (Kroger, 2017b). Kroger maintains an active and transparent account of its yearly political activism efforts through its Political Giving Annual Report (Kroger. The company strives to maintain awareness of external political forces that might directly influence how Kroger does business. However, due to recent uprisings concerning gun control laws in the United States, Kroger recently experienced political pressure from certain groups to ban guns from being carried in its stores. Kroger declined to ban guns from its stores citing employee safety as the number one reason behind the company's decision. Nonetheless, political pressure of this nature may affect Kroger's image inadvertently.

An economic factor currently affecting grocery retailers pertains to price deflation trends among certain kinds of foods and food ingredients. Since this trend impacts all grocery retailers in affected markets, it is not a characteristic weakness of Kroger per se, although it could exacerbate profitability levels for certain food products Kroger offers. According to Riboldazzi (2015), large grocery retailers like Kroger cannot leverage their size to gain competitive advantages when it comes to food price deflation because there is too much distance between grocery retailers and the producers of agricultural products. However, findings from another study showed Kroger uses slotting allowances to help offset food price deflation, where Kroger may impose higher slotting fees on agricultural product manufacturers to retain shelf space for their products (Sheldon, 2017).

Social movement groups could also interfere with Kroger's ability to self-direct its brand image and product offerings. Recently, social movement groups advocating anti-violence campaigns rallied against Kroger for its refusal to ban guns in its stores. A group by the name of Moms Demand Action sought to impose social pressure on Kroger, which negatively affected its brand image and ability to appeal to other customers (Woods, 2017). Although Kroger published an official statement on the reasoning behind its decision and desire to safeguard employees from customer retaliation, undesirable attention in the media often misconstrues perceptions about companies despite their best efforts to communicate (Lu, Liu, & Rahman, 2017). Comparable pressure from environmentalist, animal rights, and workers' rights group regarding Kroger's operational practices could inhibit the company's ability to meet its performance objectives in similar ways.

Kroger depends heavily on technology to manage its complex supply chain. Data losses or cyber attacks that could take Kroger enterprise resource planning systems offline could cause major disruption to the flow and availability of its grocery retail products (Kroger, 2017b). Additionally, the emergence of e-commerce providers could encroach upon Kroger's customer base, as an increasing number of customers and companies are looking for ways to save time and maximise supply chain management efficiencies through web-based grocery retail technologies (Trusculescu, Draghici, & Ivascu, 2016).

Environmental risks could become threatening to Kroger's complex and dynamic supply chain. While Kroger operates primarily in the United States it, directly and indirectly, depends on external stakeholder groups domestically and overseas for its products (Kroger, 2017b). Natural disasters that affect the agricultural industry or other sectors where Kroger manufacturers products could limit product offerings in stores. Similarly, large-scale disasters or ongoing inclement weather could damage Kroger's infrastructure, equipment, and materials. Thus, environmental forces of this nature may limit consumers' ability to access Kroger stores or reduce their spending capabilities, either of which could negatively impact business (Kroger, 2017b; MarketLine, 2016).


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