Kroger PESTLE 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).
Pressure from external legal influences could directly lead to financial losses if courts find Kroger guilty of wrongdoing at some point, regardless of whether such occurrences transpire unintentionally. Recent legal pressure regarding the impact of grocery retailers’ contribution to deforestation issues could result in law suits and restitution fees, as commercial agriculture activity is responsible for nearly 70% of the tropical deforestation during the first decade of the 21st century (Kroger, 2017b, p. 56). If Kroger does not proactively address emergent legal issues, it could face legal action which is also liable to propagate negative political and social pressures as well.
- Inman, J. J. & Nikolova, H. (2017). Shopper-facing retail technology: A retailer adoption decision framework incorporating shopper attitudes and privacy concerns. Journal of Retailing, 93(1), pp. 7-28.
- Kroger. (2017a). 2016 Kroger fact book. The Kroger Company. Available from http://eproxymaterials.com/interactive/kr2016factbook/
- Kroger. (2017b). Notice of 2017 annual meeting of shareholders: 2017 proxy statement and 2016 annual report. The Kroger Company. Available from http://ir.kroger.com/Cache/1500099541.PDF?O=PDF&T=&Y=&D=&FID=1500099541&iid=4004136
- Kroger. (2016). The Kroger Co. 2015 political giving annual report. The Kroger Company. Available from http://thekrogerco.com/docs/statements-policies/2015-political-spending-report-summary.pdf
- Lewis, R. (2017). Kroger Co. Encyclopaedia Britannica. Available from https://www.britannica.com/topic/Kroger-Co
- Lu, X., Liu, H. W., & Rahman, M. (2017). The impact of corporate social responsibility on customer loyalty: A case for two global corporations in China. Strategic Change, 26(3), pp. 251-260.
- MarketLine. (2016). Company profile: The Kroger Co. Available from Progressive Digital Media.
- Riboldazzi, S. (2015). Global markets and development policies in large-scale retailers. Symphonya – Emerging Issues in Management, 5, pp. 8-28.
- Sheldon, I. M. (2017). The competitiveness of agricultural product and input markets: A review and synthesis of recent research. Journal of Agricultural and Applied Economics, 49(1), pp. 1-44.
- Trusculescu, A., Draghici, A., & Ivascu, V. (2016). Importance of knowledge management systems in online retail compared to traditional retail. In Management, Knowledge and Learning Joint International Conference 2016: Managing Innovation and Diversity in Knowledge Society Through Turbulent Times (pp. 1091–1099). Timisoara Romania.