Kroger is thriving.
The supermarket chain generated $US109 billion in sales last year and just reported its 45th straight quarter of same-store sales increases.
Kroger’s success comes at a time of dramatic change in the US grocery industry.
While a single store once served all of shoppers’ food and beverage needs, consumers are now buying groceries across more than a dozen retail channels, including online retailers, discount chains such as Trader Joe’s and high-end stores like Whole Foods.
Here’s how Kroger has maintained customer loyalty despite the changing competitive landscape.
1. Kroger has huge private label selection.
Kroger’s private label now accounts for more than a quarter of total sales, according to consulting firm Conlumino.
Selling its own product instead of a name-brand version helps Kroger in a few ways.
Cutting out the middle man means the company can sell product at lower prices, drawing in more customers.
It also helps Kroger differentiate from competitors like Safeway.
2. Kroger’s loyalty program is rated the highest in the grocery industry, according to a study by Maritz Loyalty Marketing of New York.
Nine out of 10 purchases at Kroger are made with the chain’s popular “Kroger Plus Card,” according to industry expert Ronald Urbach.
The cards make customers eligible for discounts, including fuel savings of up to $US1 off per gallon at Kroger gas stations and up to 10 cents off per gallon at Shell gas stations.
Kroger’s smartphone app also offers promotions and keeps track of customer rewards.
The popularity of the loyalty program gives Kroger unprecedented access into the behaviour of its customers, and allows it to tailor promotions to individual shoppers.
3. Kroger has a wide selection of organic foods.
The grocery chain is expected to surpass Whole Foods Market within two years to become the nation’s top seller of organic and natural foods, according to a recent report by JPMorgan Chase.
Kroger’s store brand of organic and natural foods, called Simple Truth, includes more than 35,000 products. The Simple Truth line is touted as being free from 101 artificial ingredients and preservatives.
Some customers also say it’s cheaper than the alternatives.
“I love that Kroger sells Organic products now,” Jackson Courtney writes on Facebook. “And their brand organic is priced better than Meijer, Whole Foods, and Trader Joe’s!”
4. Kroger has great customer service.
Facebook user Linda Marshall recalls how her local store opened after a hurricane despite flooding.
“They are the only ones that opened up right after the hurricanes even while they were sweeping water out from their floors,” she writes. “They were there for the customers. It was s really community feeling from their employees.”
Kroger pays an average of $US14 an hour, well above the retail industry.
Paying workers better-than-average leads to better talent and retention.
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