'Fork in the road': Top U.S. grocer says America's nervous about economic future

BUSINESS

‘Fork in the road’: Top U.S. grocer says America’s nervous about economic future

Price tags are pictured at a Ralphs grocery store, which is owned by Kroger Co., ahead of company results in Pasadena, California, in 2016. | REUTERS

Bloomberg

Jan 14, 2019

NEW YORK – America’s biggest supermarket chain is seeing signs that U.S. shoppers are getting nervous about the future.

“It’s fascinating right now from a customer standpoint. They feel incredibly good about the economy but very nervous about where things are headed,” Kroger Co. Chief Executive Officer Rodney McMullen said in an onstage interview at the National Retail Federation’s annual trade show in New York City.

“If you talk about questions in the present,” American shoppers feel just fine, but “if you change the question a little to ‘where do you think things are going,’ there’s a lot of uncertainty,” he said.

Kroger operates supermarkets and other types of stores in about 35 states plus the District of Columbia under various banners, giving the Cincinnati-based company a clear window into Americans’ buying habits.

McMullen’s observations come at a time when the consumer environment in the U.S. is the strongest in years, with low gas prices and rising median wages fueling consumer confidence.

But cracks have started to emerge: retailers’ in-store traffic slipped during the critical Black Friday weekend in November, and a series of lackluster holiday sales reports in the past week suggest consumer optimism may not be as high as forecasters expected heading into the Christmas season.

McMullen said he isn’t yet bracing for the worst, and executives at Kroger “don’t see anything that would cause us to say there’s a recession right around the corner.”

Still, the U.S. appears to be at a “fork in the road,” and if wider macroeconomic issues like trade negotiations don’t get resolved, the situation could take a turn for the worse, he said.

“It’s easy to paint a picture where things could be fabulous” and another “where things could be a recession,” McMullen said. “If those things don’t play out the way we all want it to, then I think a recession is something that could happen.”