NEW YORK – Fresh food will play a critical role in the Kroger Co.’s future. Management highlighted the company’s fresh food offerings as a “differentiating strength” for the retailer in 2020 during the company’s annual investor day in New York on Nov. 5.
“Our fresh departments drive trips, loyalty and gross margin, and they’re a true differentiator,” said Joseph A. Grieshaber, senior vice president of merchandising. “Our product standards, selection criteria and supply chain are core strengths and are built to deliver first-to-market and best-in-the-season fresh products across the United States. Customers tell us they choose the store they shop based on nine key categories, and they’re all fresh. Produce, meat and dairy lead that list.
“Dinner tonight is the top reason customers go to the store on any given day, but replenishing produce, meat and seafood quickly follows. And finally, as we look at advertising testing, we see a clear pattern where spots that focus on fresh score more strongly on key customer measures, including likelihood to shop and brand love.”
Two fresh food initiatives being undertaken by Kroger include enhancing meal solution options and partnering with Apeel Sciences, a manufacturer of an edible coating that when applied to fresh produce extends its shelf life. The Apeel coating technology is being used on fresh avocados and will be expanded to asparagus and limes as well, according to the company.
Fresh meal concepts also are seen as a point of differentiation by management.
“We are growing our meal kits, ready-to-cook and ready-to-heat assortment,” Grieshaber said. “In 2019, we expanded the Home Chef assortment from 725 stores to over 2,000 stores today, and we have expanded beyond the original meal kits to include oven-ready kits, ready-to-heat sides and entrees. We are seeing double-digit growth in fresh meals and expect that momentum to continue in 2020.”
Using shopper data to create a personalized shopping experience for customers has been a central tenet of Kroger’s go-to-market strategy. In 2020, the retailer is planning to help interested consumers make healthier food choices and sees treating food as medicine as part of its long-term strategy.
“Food as medicine won't be something that creates income and revenue that helps us for 2020,” said William Rodney McMullen, chairman and CEO. “It’s not something that will help us probably for ‘21 or ‘22, but we are increasingly developing tests with health care companies and starting to learn food really is medicine.”
In 2018, Kroger introduced OptUp, an app designed to help consumers make informed, healthier purchasing decisions. Using a consumer’s purchasing history, the app can make better-for-you recommendations to help people eat healthier.
“If you think about the three biggest disease states in America today — diabetes, hypertension and heart health — (they are) 70 percent of the cost,” said Stuart W. Aitken, senior vice president. “Here’s the opportunity for us: How do we help customers eat in a way that’s personalized to them that helps change? So, for example, … I have a high-sodium diet. I’m not going to stop eating salt, but I will eat low-sodium bacon, low-sodium butter… and those small changes have a dramatic change, and how can we help customers with those nudges?
“We’ve been doing that for years with our coupons, and now we’re looking (at) how we can help customers through the likes of an OptUp change those behaviors (and) help customers live healthier lives in new innovative ways.”
Remaining on-trend will be a key focus for Kroger’s private label brands. The Simple Truth brand has a 32 percent share of the natural and organic branded foods category and is delivering strong double-digit growth, according to Kroger. In 2019, the retailer added 22 new plant-based products to the Simple Truth platform and plans to add 58 more in 2020.