Fresh and local a focus for Kroger

by Keith Nunes
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Kroger's Simple Truth products
Kroger's Simple Truth lines are generating approximately $1.5 billion in sales annually.

NEW YORK – In 2012, The Kroger Co. introduced its Simple Truth and Simple Truth Organic brands. Today, the two lines are generating approximately $1.5 billion in sales annually, and company executives are using the same data analysis techniques that led to the creation of Simple Truth to uncover additional opportunities. Two emerging areas of focus for the company include fresh and local.

“In today’s world, if you think about fresh and what it means to us, I can tell you over the last three years fresh has grown probably three times what the center store has grown,” said Mike Donnelly, executive vice-president of merchandising during the retailer’s annual investor day for financial analysts on Oct. 27. “It’s obviously, when you think about it, a customer choice.”

The focus on fresh is a bridge to the company’s efforts to improve its offerings perceived as local.

Mike Donnelly, Kroger
Mike Donnelly, executive v.p. of merchandising

“(Local) is no longer a trend,” Mr. Donnelly said. “Local is here. Local is actually essential … Local means community, and community to our customer is important.

“So, when we think about local, and we think about how many different fields or growing fields we’ll actually have, in produce alone we probably have close to 300 local suppliers that we work with. And that’s outside of some co-ops that we work with that actually have local growers also.”

The retailer’s efforts to improve the freshness of its offerings extend beyond the meat and produce. Earlier this year Kroger entered into an agreement with Sysco Corp., Houston, in which Sysco will supply products used by Kroger for prepared meals. Mr. Donnelly said the initiative focuses on streamlining the “back side of” Kroger’s business and allows the company to deliver fresher products to its customers seeking prepared meal solutions.

“So, when you think about hot foods, and you think about how we traditionally have come to market in the past, Sysco’s experts on food service are actually benefiting us in just their knowledgebase. And then working together to develop recipes for our bistros and things I think has been a good journey.”

At the heart of the retailer’s efforts is a focus on customization, said Stuart Aitken, group vice-president.

“In a mass customization world it’s incredibly important that you know and understand your customers,” he said. “And data is the key to that. Customers’ needs and trips are more complicated than they’ve ever been. It’s becoming exponentially more difficult to earn the attention of that customer and connect with them emotionally.

“At the same time, data is generated everywhere, in new ways that customers want to shop. The ability to interpret that data and deliver upon those needs, wants, and desires of customers is what we're focused on, and that is the big opportunity for Kroger.”

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