Article

Kroger Q3 Resilience, Leading with Fresh and Embracing Digital Transformation

By
Neha Ghai
January 4, 2024
kroger-q3-report

At a Glance

  • Third-quarter sales for Kroger reached $34 billion.
  • The "Leading with Fresh" initiative has led to the certification of 2,053 stores, emphasizing the grocer's focus on fresh produce.
  • Digital engagement has seen a notable increase, with a 13% rise in digitally engaged households.
  • A substantial 69% of all grocery sales in 2023 were digitally influenced.
  • Kroger has adjusted its full-year identical sales projection, revising it to a range of 0.6% to 1%.

In the third quarter, the national grocer revealed a marginal 0.5% decline in sales excluding fuel, totaling $34 billion compared to $34.2 billion in the corresponding period last year. This slight dip in sales performance can be attributed to the discontinuation of agreements with Express Scripts, a pharmacy benefit management organization, resulting in a decrease in pharmacy sales.

However, despite this modest setback, Kroger remains well-positioned for long-term sustainable growth. This is primarily attributed to its commitment to leading with fresh initiatives and a consistent focus on digital innovations. The company's strategic approach to prioritizing fresh offerings and embracing digital advancements positions it for continued success in the evolving retail landscape.

Key Highlights 

Accentuating Fresh 

The grocers fresh produce initiative has proven their testament to commitment to customers with an extended duration of freshness. As part of this effort Kroger has now certified 2053 stores under this initiative.In addition to adding local brands Kroger has added mercado which embraces latin american culinary heritage. Furthermore the grocers global recognition is triumphed by the six awards it has earned for the Murray Cheese varieties.

Delivery and Pickup 

In Q3, Kroger reported a significant 11% surge in digital sales, showcasing the company's agility in meeting changing consumer preferences. Both pickup and delivery services experienced double-digit growth, while the profitability of Ocado-supplied automated fulfillment facilities improved. Grocery Doppio’s digital grocery sales Q3 2023 performance snapshot  indicates that 12.9% of sales were digital across the Q3 landscape. Kroger's commitment to customer convenience is evident with the introduction of two-hour pickup services at over a third of its stores.

Digital Engagement

The company's focus on enhancing the digital experience is reflected in a remarkable 13% expansion of digitally engaged households during this period. This growth is attributed to intensified digital offers and enhanced personalization capabilities, underscoring Kroger's dedication to staying ahead in the dynamic digital retail landscape. 69% of all grocery sales of the omnichannel shopper is digitally influenced. The strategic value of digitally engaged households lies in their higher loyalty, nearly three times higher spending, and their pivotal role in driving growth across alternative profit ventures.

Future Outlook

The grocer has revised its full-year identical sales projection, excluding fuel, to range from 0.6% to 1.0% from its earlier prediction of 1-2%.After accounting for the impact of Express Scripts, the adjusted estimate reflects an underlying growth in the range of 2.1% to 2.5%.