Supplier, stuck with $85M hand sanitizer order, sues Kroger
K7 Design Group, a family-owned manufacturer and distributor of consumer products marketing under the “Ultra Defense” brand label, has filed an $85 million lawsuit against Kroger alleging that the grocer placed a huge order for hand sanitizer in the early months of the pandemic when supplies were running short nationwide and then refused to take shipment when demand softened.
The complaint against Kroger, which was filed last week in a federal court in Cincinnati,OH, alleges that the supermarket giant’s refusal to take delivery has left the supplier “with a tremendous quantity of hand sanitizer for which K7 has no other use and which it has been forced to store in its overflowing warehouses.” The suit claims that, not only did Kroger refuse delivery of legally contracted product, but that it “tried to use its immense market power to force K7 to absorb losses that” are the grocer’s responsibility.
K7, which lists Albertsons, Kohl’s, Meijer, Sam’s Club and Walmart among the retailers that sell its products, maintains that it filled a roughly $5 million order for its hand sanitizer for Kroger early in the pandemic. The product “flew off Kroger’s shelves” and, according to the vendor, the retailer followed with a second order of over $100 million. After an initial delivery of products that were part of the order, Kroger later refused any further deliveries, citing a lack of warehouse space as the reason. The remaining hand sanitizer that was part of that order with a value of $85 million has been sitting in K7’s warehouses ever since.
A Kroger spokesperson, responding to a RetailWire email inquiry, said, “We are disappointed by this vendor’s claims and intend to vigorously defend against their accusations.”
- Kroger Sued for $85 Million by K7 Design Group – Ultra Defense Sani + Smart/PRNewswire
- K7 Design Group, Inc. v. The Kroger Co. – Law360
DISCUSSION QUESTIONS: Is it a common practice for retailers to refuse delivery of contracted products due to a lack of warehouse space or other circumstances? Are accommodations, short of legal action, typically made in these cases and do you expect to see a resolution in the current impasse between K7 Design Group and Kroger?