Enterprise Marketing & Promotions Management

Main & Vine Latest Example of What Makes Kroger Amazing

By / March 2016


Kroger recently opened a new concept store called Main & Vine. It’s a mix of local, specialty, and everyday products, which many feel will resonate with consumers, especially those that shop at Whole Foods. There had been talk of a takeover of The Fresh Market, but Main & Vine could be the way forward for the company. It is still incredibly early days though and the company only has one store. On its recent investor call, CEO W. Rodney McMullen said: “If you think about the comments that we make on merger opportunities over the last five or ten years, everybody should assume that we look at most opportunities, especially if it’s in the U.S. We’re really looking for companies that bring something to us that we don’t have today.”

Consider what the Kroger management team, Rodney McMullen and the Kroger employees have done — 12+ years of consecutive same store growth.

Diversified for Continued Growth
Kroger is a diverse retailer:
Convenience Stores – 786
Grocery Stores – 2,744
Pharmacies – 2122
Gas Stations – 1360
Jewelry Stores – 326
Medical Clinics – 190
Kroger is a tough well managed competitor. Two major retailers, SUPERVALU and Safeway were forced to reorganize with the assistance of venture capitalists.

ClickList will be key for staving off competition from Amazon. ClickList allows consumers to shop online and pick up anytime they like without even having to leave their car. This had been operational in one market, but has now been expanded to seven markets. Convenience is key in an age where people are time-poor. Additionally, home delivery, HomeShop, is in testing phase at the moment.

Organics: Kroger’s organic produce offering is producing strong results and customer acceptance. Kroger’s SimpleTruth Organic private label program is already over a billion dollars in sales. Both could help the company beat analyst revenue expectations.

Kroger Is A Digital Force!
In the Brick Meets Click evolution, Kroger has a huge advantage over both Amazon and Google. Kroger has the resources and expertise to compete directly with Amazon Prime Fresh without major capital outlays. Kroger can simply use existing stores and inventory as “fulfillment centers” for HomeShop and ClickListwithout major capital outlays.

Recently acquired Vitacost.com which is an e-retailer which delivers everything from vitamins to groceries. Kroger acquired a fully operational e-commerce platform with virtually no impact to the Kroger P&L.

Digital Marketing
This is important! Kroger has moved and is moving to a customer – centric business model with a focus on loyalty and personalized coupons, incentives and information. They have developed very sophisticated CRM strategies and tactics and now, through mobile, are developing a CJM or Customer Journey Management capability. This means that Kroger move to a higher ROI targeted marketing strategy.

Digital Case Study a History of Innovation and Adoption

  • In November of 2014, more smart-phone owning moms visited Kroger than any other chain — more than double the number of their nearest competitor. (Moms with kids are a key retail grocery segment.)
  • A report in Mobile Commerce Daily reported that 13.7% of U.S. smartphone owning moms visited Kroger. [Placed Survey of 5,221 U.S smartphone females with children]
  • A Kroger executive stated that: ‘Kroger shoppers spend 43 percent more time using its mobile apps than other grocery stores’ shoppers do.’
  • In its Q2, 2015 investors call, Kroger management claimed its app was in the top 2% of most downloaded apps in Apple’s app store. Management also pointed out that digital was helping to drive its increased revenue.

Kroger Makes The Numbers!
If the marketplace environment is tough… Kroger management is tougher. Check out the important comparative TTM Return on equity rate as reported in December 2015:
Kroger – 34.1%
Wal-Mart – 18.5%
Amazon – 5.0%
Whole Foods – 13.8%
Publix – 19.5%
Fresh Market – 23.4%
Grocery Sector – 13.4%


  1. The Grocery industry is growing at about 0.76% through 2016. Kroger has been growing at about 5.7% since 2008.
  2. Kroger’s recent guidance of 3.5% might look pretty good in a fiercely competitive industry with low inflation prospects.
  3. Whole Foods, which has very high margin rates, has a net profit of 4.1% while Kroger is at 1.5%. However, because of astute management, Kroger has an ROE of 34.1% vs. Whole Foods, 13.8% an incredible 20.3% difference. Compare Kroger ROE to Wal-Mart, Amazon, Whole Foods, Publix, Fresh Market and the Grocery Sector.
  4. Kroger is out-performing S&P 500 and many top technology stocks.
  5. Kroger’s growing far above the industry growth rate and maintaining above average profit margins.
  6. Great history of stock buyback and dividend growth.
  7. Kroger continues to rely on and develop new technology to guide customer centric marketing strategy.

Back in January 2012, Kroger’s stock price was in the $12.00 range. Today it is at $37.80 … up over 200 % The S&P 500 long term average Index is in the range of 55.3%.

Contributed by Ron Lunde, Senior Marketing, Advertising Executive & Market Strategy Consultant
Ron held senior management positions in grocery retailing including Supervalu, Grand Union and Price Chopper. He was also a Sr. VP. at the Leo Burnett Advertising agency. Ron is credited with introducing Space and Category Management systems to the industry as well as working with the Price Chopper team to introduce and deploy the first data driven frequent shopper program in the US. He was also a consultant to the Financial Accounting Standards Board in developing the Issues that govern the accounting requirements for all trade promotion and marketing expenditures. Lunde currently serves as a Market Strategy consultant to retailers and CPG brands.


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