Look Out Walmart and Whole Foods, There’s A New Kroger On The Block
You might think of Kroger as just another grocery chain but it’s more than that. Kroger has the ability to take away business from Walmart, Target and Whole Foods.
According to Business Insider, the company revealed that it had reached $11 billion in just organic and natural sales product at this week’s company investor conference.
Whole Foods which is the biggest name in the organics space has a total of $14 billion last year, which means that Kroger is coming in fast and closing the the gap.
“We got [to $11 billion in sales] because our customers lead us there,” Kroger spokesperson Keith Dailey told Business Insider. “We worked very hard to shift our product selection to meet that need, and in some cases to be ahead of that need. In our view, Kroger helped to move natural and organic to the mainstream by making products more affordable and accessible in our stores.”
According to a recent report by JP Morgan Chase, within the next two years, Kroger will presumably take over Whole Foods to become the nation’s top seller of organic and foods within two years.
Back in 2012, the company launched Simple Trust which is their natural and organic brand and is reportedly now the largest organic brand in America.
But it’s not just organic brands that has given Kroger its fantastic growth.
The chain has been enjoying 47 quarters of continuous positive same-supermarket sales growth. In the following quarter, Kroger’s same-store sales were up 5.7 %.
While Kroger has built an organic empire in just a few years, it balances Simple Truth with brands like “P$$T” and Heritage Farm for shoppers on a budget.
“[Having clearly segmented ranges] allows customers to see different parts of the Kroger offering and select the ones that are right for them — whether they be focused on health, indulgence, or value,” Neil Saunders, managing director of retail-research agency and consulting firm Conlumino, told Business Insider. “As long as it keeps the various brands distinct, it should continue to do well in catering to multiple audiences.”
The philosophy that has shaped this multipronged approach to business is an intense focus on customer demands.
“Everything for Kroger begins and ends with customers first,” says Dailey, who reports the company adopted the ideology when it became clear in the late ’90s its aggressive growth would not be sustainable unless something changed. “It was very much in response to a changing world of food retail.”
Which means that Kroger is continuously innovating beyond what product appears on store shelves.
Evolution of Products:
According to industry consulting firm Technomic, along with evolving their products, Kroger has also been changing its look from a traditional store. Their stores are becoming smaller and more convenience-focuses and have been adopting layouts that increase fresh produce and food-service offerings. This has been attracting customers that otherwise would drive in to a chain restaurant. Are you listening, McDonalds?
Kroger has also been adding lines of clothing and shoes which is a hit for brands like Walmart and Target. “It makes sense for Kroger to selectively add categories in order to generate incremental revenue, especially as many of these products have much higher margins than in food,” says Saunders.
Watch out Walmart, Target and McDonalds, theres a new Kroger on the block.