Kroger Delivers Robust Results with Nimble & Customer-Focused Approach
At A Glance
- The foundation of Kroger's go-to-market strategy is fresh, Our Brands, personalization and seamless
- Leading with fresh is demonstrated by ensuring that fresh food is offered to customers through stores and eCommerce channels
- The Our Brands portfolio enables Kroger to provide distinctive products at a fantastic value
- For personalization, Kroger uses predictive analytics to serve customers at the right time with the best value
- Kroger's built-in digital platform provides a seamless purchasing experience with zero compromises
Since the announcement of the ‘Leading with Fresh and Accelerating with Digital’ strategy at its 2020 Investor Day, Kroger has made significant progress against its commitments - the commitment to offer customers a fresh, cost-effective, and seamless shopping experience with no compromise on value, selection, quality, or convenience. Hence, it is no surprise that the 2022 performance demonstrates precisely the same.
Customer preferences changed in 2022 as a result of inflation and macroeconomic ambiguity. Customers were looking for different ways to make the most of their budgets. As more customers turned to low-cost meal options that eateries can't offer, the gap between spending on food at home and food away from home widened in Q4 2022. Kroger continued to innovate swiftly, meeting the needs and wants of its customers. The company’s customer-focused approach helped it deliver strong results in 2022. The company noticed a particularly robust response in its higher-income households, which saw a 1.1 million household growth in this category.
“The foundation of our go-to-market strategy is fresh, our brands, personalization and seamless. By delivering on these four pillars, our customers win, and Kroger attracts new and more loyal customers,” said Kroger’s Chairman and CEO, William McMullen, in the earnings note. “At the center of our go-to-market strategy is a superior customer experience. We deliver that by consistently providing customers a full, fresh, and friendly experience.”
Kroger demonstrates the first strategy - leading with fresh - by consistently ensuring that fresh food is offered to customers through stores and eCommerce channels. The end-to-end produce solution was deployed in more than 1,400 stores in 2022, leading to measurable increases in fresh and overall store sales. To increase consumer satisfaction and enhance its product mix, Kroger will continue to innovate the fresh experience in 2023. To meet consumer demand, Kroger continues to strengthen its inventory management tools, bolstering its supply chain to ensure that food stays fresh for more days.
The Our Brands portfolio enables Kroger to provide distinctive products at a fantastic value while delivering outstanding sales and boosting margins. The quality and value of the ‘Our Brand’ portfolio are particularly crucial now that so many customers' lives are impacted by inflation. Kroger introduced the Smart Way product line, which has an opening price point, to cater to customers on a budget. The company simplifies customers' lives by combining and streamlining several brands into one while establishing a point of differentiation across the entire portfolio.
Personalization is also a key focus area for Kroger. The company uses predictive analytics to serve customers at the right time with the best value. “Because we know our customers so well, we were able to provide recommendations to start their baskets and deliver personalized offers on the products most important to them, saving them time and money and making their lives easier, added McMullen. “In return, our customers reward us with their trust and loyalty, consistently ranking us among the best at being able to offer personalized savings and solutions that meet their needs.”
Due to its customers' increased engagement with personalized coupons and fuel rewards in 2022, Kroger saw increased customer loyalty. Engagement with digital coupons rose to an all-time high as consumers sought more methods to save. Kroger's consumers could save more than $1.4 billion on the products they needed and wanted, thanks to the combination of paper and digital coupons. To offer even more value, Kroger introduced Boost last year, which is the most affordable membership in the industry nationwide.
Another focus area of Kroger - seamless - is gaining prominence among its customers, with a possibility of being a substantial growth driver over the next few years. Customers can easily switch between store, pickup, and delivery options, thanks to the company's built-in digital platform, which provides a seamless purchasing experience with zero compromises. The combination of dedicated fulfillment centers and stores has enabled Kroger to accommodate all customer needs, from in-stock purchases to large bulk orders to quick delivery of urgently required items.