Kroger Wants to Be More than CPG

Slotting fees once ruled the day for traditional grocery stores the ilk of Kroger.  The slotting fee allotment your company would get from any Consumer Package Goods (CPG), company, would drive how much shelf space their products would find on the shelf at any specific food retailer.  The more you could afford to pay a banner the ilk of Kroger, the more of your products would be on the shelf. 

Here is the problem with that system today.  According to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® most consumer do not stock a ‘pantry’ the way consumer did back in the 1950’s, 1960’s, or even in 1970. In fact, according to recent Foodservice Solutions® grocerant ScoreCards, stocking the pantry is not in the top ten things most customer want to do while shopping.  Number one on consumer’s minds is What’s for Dinner? Consumers are looking more meals and meal components today not products sit on the shelf in a pantry at home according to Johnson.

The Kroger Co. over the past 10 years has talked a lot about meals, and meal components, even opened restaurants and experimental stores but they have not found a way to break their dependence on slotting fees according to Johnson.

This new off-premise restaurant concept will debut in a Los Angeles, CA at one of Kroger’s Ralphs stores later this year, with additional locations planned for the future, the companies said in a news release. The concept will provide in-store shoppers access to meals from as many as six local and national branded restaurants and serve as preparation and delivery hubs for online users of the Kitchen United website or app. The release did not specify the participating restaurant brands.

Dan De La Rosa, Kroger's group VP of fresh merchandising, stated, "Our customers' appetite for fresh, on-demand meals continues to accelerate, and we remain focused on offering new and innovative products that provide anything, anytime, anywhere.”… "Our partnership with Kitchen United taps into restaurants' growing use of off-premise kitchen space to increase customers' access to their favorite foods.”

Here is the problem. Our new 2021 Grocerant ScoreCards found 82.3% of consumers don’t know what’s for dinner at Noon, and 61.1 don’t know what’ s for dinner at 4PM %. Consumers are looking for meals, not CPG products to sit on a shelf in a pantry from a bygone era.

Today, 83.1% all dinners have at least 1 grocerant niche Ready-2-Eat and Heat-N-Eat meal component and 68.4% have two meal components. Ghost kitchens offer meals and meal components and Kroger a new way to participate in the booming foodservice field while providing an efficient way for area restaurant brands to expand their reach and leverage Kroger’s store traffic.

Such concepts could also take advantage of often-underutilized food preparation space in existing grocery stores. Our grocerant guru doubts the sincerity of Kroger’s efforts as anything more than outsourcing consumers focus on meals too a competitor.

While, Kitchen United is a leading provider of restaurant hub technology, logistics and turn-key commercial kitchen space that lets foodservice operators tap into the growing off-premise business opportunity to save cost and labor vs. traditional brick-and-mortar sites.

 Michael Montagano, CEO of Kitchen United, stated, "Kitchen United recognizes the significant value of Kroger as a strategic partner," … "Our work together provides participating restaurants access to millions of Kroger customers and the ability to better address off-premise demand in a convenient supermarket format—a frequent destination for most consumers."

Montagano continued, "We've worked collaboratively with the Kroger team to curate a mix of popular restaurant brands, and we see a great opportunity to introduce our partnership in cities across the country."

So, how does it work? Consumers when placing an order using the Kitchen United website or app or on-site via ordering kiosks, customers can select items from each on-site restaurant to create a customized order on a single receipt. Restaurant staff will prepare the orders and delivery service fees will be determined by third-party providers, the companies said.

Craig Gauden, Kroger's director of partnership development, stated, "As we continue to define Kroger as a food destination, this collaboration creates another seamless way for our customers to order lunch or dinner for pick up while they shop for groceries or for delivery to their location of choice".

Consumers are looking for meals and meal components not slotting fees.  What are you selling them and Why? Are you doing what you have always done?

Are you looking for a new partnership to drive sales? Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday that tomorrow?  Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success. 

Could Kroger Become the Next A&P?

 

Kroger has 21 different banners.  Let’s just wonder out loud if you have 21 banners how can you have a cohesive brand message?  When you buy a brand simply to show ‘Wall Street’ growth to drive your stock price up in the end you have only 21 regional branded companies struggling to find the undercurrents of success in 21 different markets or channels of distribution, that is according to Steven Johnson, Grocerant Guru® at Tacoma, WA base Foodservice Solutions®.

With 21 different banners, Kroger is blurring the lines at the top and bottom of the market with messaging from the middle according to Johnson. Today, all 21 banners combined they still are positioned in the middle of the marketplace catering to all, focused on yesterday’s food retail positioning rather than tomorrows customer according to Foodservice Solutions® Grocerant Guru®.

Back in the day when the Great Atlantic & Pacific Tea filed for creditor protection, A&P owned Waldbaums, Food Emporium, Super Fresh, Pathmark, and Food Basics, as well as its namesake A&P stores. Ok, I know that is not 21 banners.  Nor, am I suggesting that Kroger is even low on cash. Nor, am I saying they will have to file for creditor protection. 

However, as the pandemic comes to a close watch for Kroger to begin selling banners and brands to drive cash flow. Remember it was not so long ago that Safeway had to sell of its Canadian operations, Albertsons was bought by Supervalu after losing its way.

Battle for Share of Stomach

Yes, multiple brands all focused on the middle market; just how well did that work for A&P?   Each of these brands has a seemingly greater focus on yesterday’s business model of demanding slotting fee’s rather than tomorrow’s model of grocerant niche Ready-2-Eat and Heat-N-Eat fresh food. How can that be in 2020?

WinCo has proven very successful as a low-price competitor in the western US where Kroger has been forced to reduce prices across the board at all locations over the past six months. Aldi with quality private label food products, focused on price is the fastest growing grocery store in the United States and is about to become a disruptor in California, all the while it is now opening stores in Arizona.

Foodservice Solutions®, Grocerant Guru® predicts that Kroger will struggle to compete with the newcomers WinCo and Aldi just as it has with Wegmans, Whole Foods Market Inc. and Trader Joe’s Co. So, we ask do you think Kroger can win positioned in the middle if so for how long?

This is the grocery business not brain surgery.  The vast majority of retail food customers do not want to cook from scratch, do dishes, or spend the time planning meals. They want fresh prepared meal components that can be mixed and matched into a customized family meal quickly according to our Grocerant Guru® as regular readers of this blog know.

The pandemic will end, consumers will move on. Will Kroger in four years look more like tomorrow or yesterday?  WinCo, Lidl, and Aldi are winning the hearts and minds of consumers.  We don’t think there is a difference between the Kroger story of today and the A&P story or yesterday.   

Invite Foodservice Solutions® to complete a Grocerant Scorecard or a Grocerant Program Assessment.  Since 1991 www.FoodserviceSolutions.us  of Tacoma, WA has been the global leader in the Grocerant niche visit Facebook.com/Steven Johnson, Linkedin.com/in/grocerant or twitter.com/grocerant   Call: 253-759-7869 or Email: Steve@FoodserviceSolutions.us  

Kroger Tries Everything including Virtual Restaurants but Will it Help

The Kroger Co. with 19+ banners and slew of branding lessons learned is once again grasping for something to become a breakout hit according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

After spending $12 million dollars on a test concept store Main & Vine they closed the door. Clearly, after spinning off Lucky’s Market and taking a $238 Million dollar charge, opening a virtual restaurant should not cost them $12 Million and this just might be the key to leaning how to rebrand some of their 19 banners to focus on meals rather than slotting fees and shelf space.

When Kroger announced a partnership with ClusterTruck to open a series of delivery-only “dark kitchen” restaurants capable of delivering fresh meals to shoppers in less than 30 minutes Johnson, said “customer migration from cooking from scratch to grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared meals continues to drive customer adoption and Kroger if they have the ability to vertically integrate a customer focused message just might have a chance within this space.”

The Kroger Delivery Kitchen Powered by ClusterTruck will offer multiple menus from a single scratch kitchen, the Cincinnati-based retailer said. The service officially launched Dec. 2 in Carmel, Ind., with additional availability in Indianapolis; Columbus, Ohio; and in Denver, where the service will be known as King Soopers Delivery Kitchen. If you live in one of those locations please let us know if you tried the service, if you liked the food, and if the food was hot and delivered within 30 minutes.

Kroger executives have long looked at restaurants and prepared food as market-share opportunities, noting shoppers spend about as much on food away from home as they do on food at home. The company in recent years has opened a restaurant; invested in the meal kit company HomeChef; and recently launched a food hall at a new flagship store in downtown Cincinnati. Kroger will potentially bring new marketing power and its own customer data to ClusterTruck. But that’s not all that’s needed. Is your brand looking for grocerant niche success, quit looking and call the experts since 1991, Foodservice Solutions®.

Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit Facebook.com/Steven Johnson, Linkedin.com/in/grocerant/ or twitter.com/grocerant

Kroger Stumbles Forward: Looking more like Yesterday than Today or Tomorrow

Back in the day there were 1,225 thriving malls in the US and everyone of them had a food court that kept shoppers from getting hungry while they shopped according to Foodservice Solutions® Tacoma, WA based Grocerant Guru®, Steven Johnson.  Today, less then 700ish, are doing well and many others are are doing all they can to stop stores from closing and leaving the mall.

The food court could not save the mall and it will not save legacy grocery stores the ilk of Kroger according to Johnson.  So, when Kroger opened new store in downtown Cincinnati, complete with a ‘food hall’ aka food court it was a sure sign that looking backward for Kroger was easier than looking a customer ahead in the minds-eye of the team at Foodservice Solutions®.

Kroger can call it what they want but to food professionals it’s a food court and it will be consumed with problems the ilk of, operator - turnover, marketing, and access problems others retailer have gotten away from. Kroger’s food court features a full-service bar and five local Cincinnati restaurants: 

·         Kitchen 1883 Café and Bar

·         DOPE! Asian Street Far

·         Django Western Taco

·         Eli's BBQ

·         Queen City Whip

One miss-step can be over looked.  However, our Grocerant Guru® recently visited a Kroger remodeled Fred Meyer store (Pictured above).  It looks like a grocery store from 1990 who’s focus was fresh food?  We ask why?  Sure, Kroger invested $ 12 Million in Main & Vine three years ago only to close it 19 months later.  How could it be that they do not leverage any lessons learned? We ask, why would you remodel a store and have it reflect yesterday customer expectations, not today’s or tomorrows?

Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday that tomorrow?  Visit www.FoodserviceSolutions.us for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success.

Grocerant vs Grocery: Stack them High & Let the Fly or Fresh Food Fast

What a conundrum for legacy grocery stores that are run by aging baby boomers do what worked for decades or evolve with today’s consumers.  Gone are they days grocers could just sit back collect slotting fees for stocking the shelves with products food manufactures wanted them to sell for little or no profit.  Living off slotting fees is a thing of the past according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Today consumers have elevated fresh food choices.  There are now 29 restaurants for every traditional grocery store in the United States and most offer meals and meal components for takeout and delivery extending their brand’s reach directly into the home according to Johnson.

Back in the day stacking the shelves high and selling at velocity was all grocery stores had to do to find success.  Consumers no long want to cook from scratch they want Ready-2-Eat and Heat-N-Eat fresh prepared food, and they want it fast.

Like it or not the grocery store business has to change and that change must be driving by leaders willing to focus more on the present, and future than the past.  Sales of many legacy CPG shelf stable products continue to slip as consumers migrate to grocerant niche fresh prepared food for immediate consumption.

The fact is fresh and perishable foods generated at grocery stores sales of more than $177 billion in the latest year according to Nielsen. That’s nearly 14 times as high as all food and beverage sales online this year. Across the FMCG brick-and-mortar landscape, fresh categories have driven nearly 49% of all dollar growth this year. Furthermore, many fresh ingredients have been the starting point for category reinvigoration across both packaged food and non-food items. When so many retailers are struggling to get people in store, it’s no surprise that many are placing a heavier emphasis on fresh categories throughout the perimeter. Today, fresh categories are an invaluable source of growth within the four walls of your in-store environment according to Nielsen. So are you still looking for slotting fees? Why?   

Cook it fresh sell it fast. Invite Foodservice Solutions® to complete a Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 www.FoodserviceSolutions.us  of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869