kroger co was upgraded to neutral from underperform at bank of america but analysts say food retailers face myriad challenges in 2022 including inflation and supply chain problems kroger kr is one of the food retailers that bofa analysts expect will benefit from digital developments that emphasize ease for consumers others include target corp tgt  bank of america’s top choice in the category walmart inc wmt  costco wholesale corp cost and albertsons cos inc aci  but those companies are all rated buy at bofa but analysts note that walmart target and others have seen traffic rebound while kroger has not “while we believe kroger’s strong omnichannel positioning should support market share gains and profitability long term given alternate profit stream opportunities like digital advertising – we think valuation upside could be limited as kroger’s store traffic remains negative” bank of america wrote in a note “we also think industry challenges from labor supply chain  inflation costs  retail could spill over into 2022 while tough fuel profitability compares  ocado buildout costs could additionally pressure margins however we note that strong profitability from administering covid vaccines 10 million shots so far should continue to support higher pharmacy margins into early 2022” see walgreens should get a boost from omicron home testing demand and pediatric vaccines analysts say grocers are expected to feel the impact as stimulus cash disappears and changes take hold in the us population “shoppers are seeking more variety including more general merchandise options when they shop as millennial household formation signs of a potential baby boom and ‘the great resignation’ have accelerated since the precovid period supporting our ‘discount store decade’ thesis while potentially encouraging negative store traffic trends at smallerformat grocers and dollar stores” analysts said smaller grocers with fewer digital capabilities and a smaller selection are expected to suffer more as the year unfolds bank of america analysts downgraded grocery outlet holding corp go to underperform from neutral and lowered their price objective to 23 from 26 “we see risk to grocery outlet’s samestore sales outlook as we believe trip consolidation through covid that has favored food retailers with broader assortments … will likely continue in 2022 and pressure grocery outlet’s potential for a recovery in traffic which was still negative as of 3q21” analysts wrote in a separate note “while grocery outlet began piloting sameday delivery through instacart in 2021 in 68 stores in california as of 3q we believe grocery outlet’s treasure hunt model makes the implementation of ecommerce difficult on a large scale this means grocery outlet also lacks the ability to unlock alternative profit stream opportunities like digital advertising made possible through a firstparty digital platform” kroger stock has soared 456 over the last year grocery outlet shares have slumped 341 and the sp 500 index spx is up 202 for the period