Welcome to the hunger games

When shoppers start cutting back on food, you know things aren’t good.

This latest ominous sign comes courtesy of Kroger: Although more shoppers were scrounging the chain’s aisles in Q2, they were tossing less in their carts. As a result, same-store sales inched up just 0.2%, below estimates of 0.8%. Total revenue rose 2% to $34.62 billion, short of forecasts for $34.64 billion.

Part of Kroger’s problem was the cyclospora outbreak, which had shoppers avoiding produce like the plague. But price tags were ultimately an even bigger issue than parasites.

“Customers remained under pressure and that has affected the industry broadly,” Kroger CEO Greg Foran explained on a call with investors.

Giving credit where it’s due: Kroger managed to turn Americans’ anxiety over gas and grocery prices into a competitive edge. The company tweaked its rewards program so that grocery purchases translate into bigger gas discounts—giving customers one more reason to fill up their tank right after loading groceries into the trunk. That boosted demand at Kroger pumps enough to outpace the broader market.

Still, this trick alone didn’t juice sales enough to cover the gap, and the future does not look bright: Kroger lowered its full-year same-store sales growth outlook to a range of 0.2% to 0.8%, down from its previous projection of 1% to 2%. Investors took the news in stride though, with the stock ending the day up 2.7%.

Grocers are tightening their belts

Kroger is hardly the only grocery store enduring a grim stretch. Walmart, the world’s largest brick-and-mortar retailer, recently suffered its worst day on Wall Street in nearly five years after mixed earnings raised concerns that even its bargain-hunting customer base is starting to tap out. To make up for it, the mega-discounter announced plans to funnel much of its $2.9 billion in tariff refunds into slashing prices—which sounds nice for shoppers, but not so nice for Walmart investors and their bottom line.

Other stores have gotten more creative rejiggering the math. Whole Foods announced plans to shrink its cavernous stores, which typically sprawl across 40,000 to 45,000 square feet—big enough to lose your keys, your kids, and your grocery budget all at once. In place of that acreage, Whole Foods plans to expand its “Daily Shops” concept, which takes up about one-fourth the real estate; a footprint that should help trim costs and pass those savings along to customers.

Meanwhile, Costco—infamous for even bigger shopping warehouses of 146,000 to 147,000 square feet—is finally paying attention to a corner of its business that takes up no floor space at all: its website. Costco’s e-commerce arm, long derided as an afterthought, saw digital sales soar 17.9% in August—and unlike Amazon and Walmart, which have poured major cash into building out their delivery infrastructure, Costco has simply outsourced the heavy lifting to partnerships with companies like Instacart.

Let that be a lesson to us all: Sometimes, getting others to carry your groceries is the real victory.—JD