Letter To The Editor: Study Shows Kroger Prices 14.4 Percent Higher Than Walmart

Los Alamos
Kroger claims its Smith’s supermarkets no longer accepts Visa credit cards because of excessive fees and to “keep” prices low.
This doesn’t ring true, because a recent report reveals that Kroger’s prices aren’t low to begin with.
Kroger’s average best price was 14.4 percent higher than Walmart’s (which accepts Visa) on a basket of goods in eight big markets around the nation, according to an examination produced by Chris Mandeville, an analyst at New York investment firm Jefferies. This is a multiyear high, Mandeville states, and it’s up from 12.5 percent in December.
Since it is obviously not lowering prices, what is Kroger actually doing with the fees that it no longer pays Visa? Kroger’s filing with the SEC this week may provide some clues. Top executives are getting massive bonuses:
  • Kroger CEO Rodney McMullen received a 19 percent raise to $11.7 million, supercharged by a whopping $2.7 million bonus that was 7.5 times larger than last year’s cash payout;
  • Chief Financial Officer Mike Schlotman got a 26 percent raise to $5.5 million, including his $1.4 million bonus that was 563 percent bigger than last year;
  • Chief Operating Officer Michael Donnelly’s pay increased 29 percent to $5.5 million, including a $1.3 million bonus that was 631 percent larger this year; and
  • Chief Information Officer Chris Hjelm got a 34 percent bump to $4.5 million, including a $1.1 million bonus that was 560 percent bigger than last year.
Incidentally, CEO McMullen’s compensation was a staggering 483 times that of Kroger’s median (not lowest) employees’ pay, according to the filing.
One can conclude that Visa is banned mainly so Kroger can keep bonuses excessively high for their top executives, not to lower prices for shoppers. In the meantime, they have alienated thousands of Visa customers.
Kroger Corp Proxy Statement, April 2019