Kroger’s retail transformation was front and center at its analyst day, as the firm aims to remake its business with its Restock Kroger framework. Chairman and CEO Rodney McMullen said during the Tuesday (Nov. 5) meeting that “Restock Kroger is repositioning our business by widening and deepening our competitive moats” in four main areas. The first area is redefining the grocery environment, enhancing the customer connection by creating an experience that is seamless, simple, easy and intuitive.
McMullen noted that the company is “using our data to drive personalization.” The company’s physical stores are seen as a competitive advantage, as winning is defined by owning the customer relationship through the entire seamless ecosystem.
The grocer is working with icons like Walgreens and Microsoft as well as innovators such as Ocado and Nuro to enhance the customer experience and accomplish tasks that it cannot do alone.
McMullen noted that Kroger is putting the right talent and teams in place to focus on growing its core supermarket business and its alternative profit businesses. He also noted that its “live our purpose” area is “not a platitude, but a business imperative.” He pointed out that customers, associates and investors are increasingly choosing to purchase from, work for and invest in companies that are purpose-driven and actively making the world a better place.
McMullen noted that Kroger has invested in both its customer and associate experience. Those efforts include investing in building a seamless ecosystem that brings together the best of the physical store and the digital online experiences. He added that the firm is well on its way to making the Kroger experience available to 100 percent of Americans, through a combination of stores, pickup, delivery and shipping platforms.
The company generated more than $1 billion in cost savings in each of the last two years, and expects to do the same next year. McMullen also said Kroger made good progress in establishing partnerships, an approach that he said holds “strategic value” beyond the three-year Restock Kroger plan.
In terms of a market view, McMullen noted that food is a “huge industry” – a $1.5 trillion market – and that there is a lot of room for share movement. “It is big enough for different models to coexist, and ours will be one of them because Kroger is uniquely good at food,” he said.
Grocery Innovation
Kroger’s analyst day comes during a year full of partnership and technology news for the grocer. In August, reports surfaced that a Kroger Express grocery assortment and the Kroger Pickup service will come to 35 Walgreens locations in the Knoxville, Tennessee market, care of an expanded partnership between The Kroger Co. and Walgreens Boots Alliance. And Walgreens’ branded beauty and health products will be sold in 17 Kroger grocery stores.
Kroger Vice President of New Business Development Jeff Talbot said in an announcement at the time, “We continue to redefine the grocery customer experience and partner for customer value through our Restock Kroger transformation plan. Our growing relationship with Walgreens is just one more way Kroger is making life easier and better for even more customers – because everyone deserves to have affordable, easy-to-enjoy, fresh food.”
And in July, reports surfaced that Kroger and Ocado were teaming to build the second of 20 planned automated warehouse facilities, and that they had broken ground on what they call America’s second customer fulfillment center (CFC) in Florida. In other efforts, the grocer announced in July that it is partnering with tech company Nuro for the pilot of an on-road, fully autonomous delivery service for customers. Per news at the time, shoppers could place same-day delivery orders through Kroger’s ordering system and Nuro’s app. Orders were to be delivered by Nuro’s fleet of autonomous vehicles during the test.
In January, Kroger and Microsoft announced that the two were joining forces to enable a connected store experience leveraging Microsoft’s Azure cloud computing service and Kroger technology. Kroger and Microsoft said in a press release at the time that through the partnership, Kroger would test a connected store experience and jointly market a commercial retail-as-a-service (RaaS) product for the retail space.
With a focus on partnerships and digital technology, Kroger aims to drive innovation through its Restock Kroger initiative amid its retail transformation.
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