Kroger’s Digital Sales Soar, Will Serve Entire Nation by Year’s End

Tim Denman
Editor in Chief
a man wearing a suit and tie

Kroger continues to scale its reach thanks to digital and fulfillment initiatives that will put it in front of every U.S. consumer by the end of the year.

At the grocer’s annual shareholders’ meeting, CEO and chairman Rodney McMullen discussed Kroger’s surging digital efforts as well as its ongoing Restock Kroger initiative.

Below are the highlights from the CEO’s presentation on Kroger’s health and the state of its various ongoing digital initiatives.  

Kroger’s Reach. The grocer expanded its coverage area to reach 93% of its customers in Q1 2019. McMullen reported that “by the end of this year, everyone in America will have the ability through our modalities to shop with Kroger whether they decide to come to our store, use our pickup or delivery service, or our Kroger Ship.”

Restock Kroger. “Restock Kroger starts with customer obsession at every level of our organization,” said McMullen. “That's why we're building an omnichannel platform to serve customers with anything, anytime, anywhere. That is why we're joining with exciting partners both large and small who share our passion for using technology to create innovative customer experiences and additional value. That is why we are developing leaders who are passionate about people and food. And that is why we are meeting the customer's growing desire to know that the company they choose to shop with is a company with a purpose.”

Bottom-Line Savings. Thanks to its various Restock Kroger initiatives, the grocer has enjoyed more than $1 billion in savings and benefits through process improvements over the past year.

Digital Growth. Digital sales increased 42% in the first quarter and 58% in fiscal 2018. “Since 2014, we have gone from no digital sales dollars to a 2018 annual run rate of about $5 billion which will trend toward $9 billion digital sales run rate in the future,” McMullen said. “I call this out because while we're not only in the middle of the transformation, it's important to frame up the magnitude of the progress that we've already made.”

Private Brands. Over the past six years Kroger’s Simple Truth brand has gone from launch to more than $2.3 billion in sales annually.

Smart Warehouses. Kroger broke ground in Cincinnati on its first high-tech customer fulfillment center powered by Ocado. “The innovative facility brings first-of-its-kind technology to the United States and creates over 400 new jobs in our home state,” said McMullen. “We are excited to build nearly two dozen customer fulfillment centers across America. We recently identified additional sites in Central Florida and the Mid-Atlantic region.

Autonomous Fulfillment. At the shareholder’s meeting last year Kroger debuted Nuro, its full autonomous on-road fulfillment vehicle. Over the past year, Nuro has been put in the field in Scottsdale and Houston.

Next-Gen Workforce. Kroger’s average hourly rate is over $20 per hour including comprehensive benefits. In addition, Feed Your Future, the grocer’s education assistance program provided funds for education to more than 2,500 associates.

Retiring Leaders. Two of Kroger’s senior officers are retiring this year. Mike Schlotman who has been with Kroger for 34 years, most recently as EVP and CFO. Chris Hjelm will retire after 14 years of service, most recently as EVP and CIO.

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