Kroger

Sector: Food, drug and mass retailers Countries of operation: US Key product categories: Grocery Annual Metrics   [caption id="attachment_151427" align="aligncenter" width="700"] Fiscal year ends January 30 of the same calendar year
*Excluding fuel[/caption]   Summary Founded in 1883 and headquartered in Cincinnati, Ohio, Kroger operates numerous store formats including convenience, grocery, jewelry and multi-department stores. It owns a range of banners: Baker’s, City Market, Copps, Dillons, Fred Meyer, Gerbes, Kroger, Metro Market, Ralphs and Smith’s. As of January 29, 2022, Kroger operates 2,726 supermarkets under its various banners—2,252 of which include pharmacies and 1,613 that include fuel centers. Kroger owns 33 food production plants—primarily bakeries, dairies and delis. These production facilities produce around 29% of the company’s total private-label units and 40% of the grocery category private-label units sold in its supermarkets, according to the company. The remainder of its private-label units are produced by third-party manufacturers. Company Analysis Coresight Research insight: Kroger is the largest pure-play US grocer, and operates multiple banners with strong local ties and brand recognition. The company is uniquely positioned to gain market share across the food landscape. In food-at-home, the company is expanding into new regions (with or without stores), enhancing its product assortment (especially in fresh produce and private brands), focusing on a seamless digital business (supported by Ocado technology) and building loyalty (through personalization and its paid membership program, Boost). In food-away-from home, Kroger is expanding its meal-kit offering, partnering with ghost kitchens, and leveraging Instacart and DoorDash to deliver prepared food. The company is using its food business to grow opportunities beyond food, such as digital, fuel, health & wellness, personal finance and retail media. These new growth areas, such as personal finance and retail media, are significantly more profitable than its core food retail business and should boost margins over time.

Tailwinds	Headwinds
Exposure to high-growth e-commerce, with major investments in Ocado-powered automated customer fulfillment centers, as well as collection and delivery options Strong private-label offerings, which generated over $28 billion in sales in fiscal year 2022 Scale advantage, spreading distribution and supply chain expenses over a large sales base	Intense competition in grocery, necessitating continued investment in the store experience and low prices to maintain store traffic Encroachment of discount formats, including expansion by Aldi and Grocery Outlet, and strong competition on price from Walmart

  Strategy On March 31, 2021, Kroger outlined its new strategy, “Leading With Fresh and Accelerating With Digital.” The retailer aims to “drive its financial model forward, including a clear path to generate total shareholder return of 8–11%,” through three core elements, which we detail below: 1. Grow sales and share by leading with fresh food

• Combine its strengths in fresh food with its growing digital business to enable the company to continue winning share in the highly fragmented $1.4 trillion addressable US food market. Kroger currently has around a 10% share of the food-at-home market, according to the retailer.

2. Accelerate digital growth and profitability

• Double e-commerce sales by 2023, by increasing the capacity of its pickup and delivery services, expanding its assortment and evolving its personalization platform.

3. Leverage competitive moats to drive sustainable growth

• Leverage the four competitive moats—Fresh, Data and Personalization, Our Brands and Seamless— to drive customer trips and loyalty, enabling the company to gain market share.

Revenue Breakdown Company Developments

Date	Development
April 20, 2022	Kroger announces that it is hiring over 200 associates for roles in logistics and transportation as it prepares to bring its Kroger Delivery service to South Florida.
March 2, 2022	Kroger announces plans for a new customer fulfillment center in Cleveland, Ohio, which is expected to open in 2023.
January 12, 2022	Kroger expands its collaboration with electric autonomous vehicles manufacturer Nuro by introducing the latter’s third-generation autonomous vehicle for last-mile delivery.
October 25, 2021	Kroger announces that its meal-kit subsidiary Home Chef has surpassed $1 billion in annual sales.
June 6, 2021	Kroger announces the opening of Ocado-powered customer fulfillment center in Florida, marking the company’s entry into the state with e-commerce (Kroger does not operate any stores in Florida).
May 3, 2021	Kroger announces a partnership with drone technologies provider Drone Express, launching a pilot that offers grocery delivery via autonomous drones.
January 27, 2021	Kroger announces the election of Kevin Brown and Amanda Sourry to the company’s Board of Directors.
January 22, 2021	Kroger and Ocado jointly announce the construction of a new fulfillment center in Phoenix, Arizona.
September 29, 2020	Kroger appoints Gabriel Arreaga as SVP of Supply Chain.
September 28, 2020	Kroger announces the opening of a high-tech customer fulfillment center in Romulus, Michigan, in partnership with Ocado.
August 20, 2020	Kroger launches a new interactive prescription drug safety course for adults.
August 11, 2020	Kroger announces plans to integrate a marketplace into its offerings in the fall.
August 4, 2020	Kroger announces its new Simple Truth recycling program, advancing its zero-waste vision.
July 8, 2020	Kroger announces a multi-year relationship with Vibenomics.
April 21, 2020	Kroger offers a blueprint to help US businesses plan to reopen safely.
January23, 2020	Kroger and Ocado announce plans to build an automated online grocery fulfillment center in Frederick, Maryland.
January 8, 2020	Kroger’s private-label brand Simple Truth launches new Emerge: Plant Based Fresh Meats range.
December 11, 2019	Kroger and Walgreens deepen their partnership with a new group purchasing organization known as Retail Procurement Alliance.
November 14, 2019	Kroger and Ocado announce plans to construct sixth online grocery fulfillment center in Pleasant Prairie, Wisconsin.

  Management Team

• W. Rodney McMullen—Chairman and CEO
• Garry Millerchip—CFO
• Stuart W. Aitken—Chief Merchant and Marketing Officer
• Yael Cosset—CIO

---

Source: Company reports/S&P Capital IQ