Kroger Downgraded to Sell as Walmart Reclaims Grocery Dominance

Melius Research downgraded Kroger (NYSE:KR) to Sell, assigning a $58 price target, citing a sharp erosion in the grocery chain’s competitive edge as Walmart reasserts itself as the dominant force in U.S. grocery retail.

Analysts reflected on a period from 2013 to 2015 when Kroger nearly rivaled Walmart, thanks to tighter pricing, superior service, and a higher-quality offering. During that era, Walmart was struggling and losing ground, with Kroger's price gaps ranging from just 5% to 8%.

But the landscape has changed. Walmart has staged a significant comeback, now outperforming conventional grocers across multiple categories. The company’s resurgence has been fueled by wider pricing advantages, stronger service, better fresh food execution, improved merchandising, and a clear lead in digital retail.

As a result, Kroger is increasingly losing share, struggling to match Walmart’s momentum in both store performance and customer experience.

Melius now views Kroger’s stock as overvalued relative to its deteriorating position in the market, with limited upside potential amid intensifying competition.