Photos: Main & Vine
Kroger launching fresh foods concept
Kroger, the nation’s largest operator of traditional supermarkets, is launching a new smaller banner, Main & Vine, described as a place “Where eating is healthy, affordable and fun!”
“You’ll find groceries you can feel good about, friendly advice and a whole lot more … right where you live, work and play,” states marketing copy on mainandvineshop.com.
The first store in Gig Harbor, WA in the Seattle area will run 27,000-square-feet, according to the company, stocking “big brand staples” along with fresh, organic and local foods. The store will also offer prepared food, a coffee, wine and beer bar, and a dual-level café area. Produce and bulk sections will be located in the center of the store. Kroger already operates a Quality Food Center and Fred Meyer in the Seattle area.
Writing for the Cincinnati Business Courier, Steve Watkins said the smaller concept could fit Kroger’s plans to open more urban-format stores following its acquisition of Roundy’s Inc., which included the Mariano’s chain in Chicago.
But the concept also builds on Kroger’s success in fresh foods. Earlier this year, Kroger announced that its Simple Truth or Simple Truth Organic lines had reached $1 billion within two years, becoming its most successful brand launch ever. In October, HemisFares, a higher-end private brand of premium imported products, was launched.
JP Morgan recently predicted that Kroger would surpass Whole Foods as the nation’s top seller of organic and natural foods within two years. Main & Vine could also be partly a response to Whole Foods’ smaller, friendlier-priced concept, 365, that is due to launch in 2016.
“The Pacific Northwest is a hotbed of fantastic artisans and producers, and we know there’s strong interest for organic, fresh and unprocessed food, but also for those mainstream items and little indulgences that families both want and need,” said Dann Kohl, Main & Vine’s store manager, in a statement. “That’s where Main & Vine comes in.”
- Main & Vine
- Kroger launches a new fresh food concept – Cincinnati Business Journal
- Kroger built a $1 billion threat to Whole Foods in only 2 years – Business Insider
- Gig Harbor QFC to reopen as Main & Vine – Business Examiner
- Kroger’s new store concept sounds a lot like New Seasons – Oregonian
- Kroger CFO: Latest acquisition could launch downtown Cincinnati store – Cincinnati Business Courier
- Kroger Introduces HemisFares – Kroger
Discussion Questions
Is it wise for Kroger to use a separate banner to fully capitalize on the organic and natural foods opportunity? Is the sweet spot around the “fresh” opportunity still around smaller store formats?
Poll
BrainTrust
Mark Heckman
Principal, Mark Heckman Consulting
Richard J. George, Ph.D.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Makes sense.
As Retailers gain scale, they too often become so conditioned to systematize their procedures that they fail to provide their associates with the runway to innovate. Kroger has successfully kept their diverse banners for grocery across the country. That, in turn, has helped the best ideas of each of the banners to be launched in new locations across the country.
Main & Vine might be the ideal small format store for select neighborhoods across the country, or it might generate the new ideas which can be implemented within Kroger, Smith’s, Fry’s, Ralph’s, QVC, King Sooper or numerous other Kroger banners.
The sweet spot around “fresh” is around the unique markets in which grocers might compete in a profitable manner.
I think it absolutely wise to separate the banners as Kroger does many things right, but I find even their best stores not equipped to be a leader in fresh.
Fresh, with all the trimmings of organic and natural foods, requires associate expertise and the willingness to handle a broad variety of fresh products that traditional supermarkets avoid handling due to their scant sales and likelihood to add to perishable shrink. It will be interesting if Kroger approaches this business with a different operational perspective from their traditional stores or hopes to keep labor and shrink at traditional levels and expects to enjoy the higher margins which come with fresh and specialty offerings.
In addition, with seemingly every traditional retailer running to build smaller “fresh” stores as a means to expand their overall marketshare, it is doubtful that all of these stores will find enough business to be successful, especially with Whole Foods, Sprouts, Fresh Thyme and Fresh Market already firmly entrenched in that niche.
I like the idea of a separate banner, but the key, I think, will be whether they can stock enough base products to make it a satisfying one-stop shopping experience.
I don’t think store size is the sweet spot for fresh — I think it’s the execution that’s important, along with the price tag.
A separate banner provides a fresh slate for the company to roll out new format and assortment concepts; so no issues on that front.
Smaller formats give the consumer a more intimate, transparent and easier to shop footprint. Such a format reinforces the fresh concept with healthy eating choices that meet trending lifestyle changes.
Kroger is building an impressive portfolio of store formats on top of proven operational execution.
I think it is wise for Kroger to do this. Kroger will probably not be very good at it but neither are most of their competitors. Earth Fare, Sprouts, The Fresh Market, Lucky’s and Fresh Thyme are all just average at best. The only two that seem to perform above market are Trader Joe’s and Whole Foods, which are so far about the bar, they leave the rest as distant also-rans. Kroger will be just as good as the other sterile fresh stores that are opening. Many of their competitors pay ridiculous rents while Kroger has more scale to keep prices and expenses in line. Kroger will probably stick with it a bit longer during the learning curve while Publix did not have the patience.
Kroger continues to reinvent itself. From its leading edge focus on customer analytics via Dunnhumby and its innovative Customers First program to its online shopping and electronic shelf tags to its complementary acquisitions, Kroger has generated 48 consecutive quarters of positive identical supermarket sales growth.
I like the separate banner concept. Whether it is used to compete with Whole Foods, offer a smaller selling footprint or become its urban store model, it does differentiate itself from a traditional Kroger. This has been Kroger’s marketing mantra, namely, buying or developing formats which have a distinctive equity, e.g., Vitacost, Harris Teeter, Roundy’s and Mariano’s. The separate banner concept has served Publix well with its GreenWise and Sabor banners.
I would not bet against Kroger.
Separating this banner is a very good idea and will definitely allow more targeted messaging, promotions and product assortments that resonate with the intended shoppers. I foresee this approach expanding for Kroger as more customization prevails.
The separate banner makes sense because it sets consumer expectations for something different. Shoppers won’t necessarily expect to find everything they need, but can be delighted by what is offered.
I don’t think we have seen the maturation of the balance consumers will ultimately frame between organic, natural, fresh and “traditional” shopping. For the time being the smaller store format is a financial safety net as the concept (for Kroger and other retailers) evolves. If the smaller stores turn out to prohibit growth, the large retailers already have the real estate to expand their initiatives.
I think it’s innovative and risk averse at the same time.
The separate banner is extremely important. “Kroger” means one thing to shoppers. “Main & Vine” will mean something else. Adding the “Kroger” name will simply mean to many, “we are trying to fool you by talking about fresh and ultimately providing the same old processed foods.”
The “good food” trend has a long way to go and it cannot be projected because a conventional supermarket has a small section dedicated to it. The “fresh food” shopper will always be suspicious. Good for Kroger for stepping outside traditional comfort zone. Few retailers will and they will suffer for it.
The cry for diversity and individualism is seeing astounding growth and response from American society. Grocery store types and sizes are one of the more interesting ways to follow this trend and the amount of stability the different types may or may not have. Traveling a 20 mile radius from my home location the more arduous task in the search for grocer product specific stores would be to find non-representation. This is good for one and all except perhaps the big boxes.
Yesterday on a popular business news cable cast I listened to a Mastercard executive claim that fiscal year 2015 saw an average of slightly more than 15 percent growth in the small niche market retail business while the larger stores were largely showing flat results. I must say this is from MC’s perspective alone and will most likely see an overall market adjustment which is largely to be determined.
That said it is perhaps still a good idea for Kroger to initiate a new limited-status endeavor with its own identity. For the large part there is a lot of store space for low lease prices as well as low labor prices in this stagnant endless recession retail still owns. These conditions make the decision to start something totally new compellingly easy. And from this the rest of us may get a closer look at the potential for smaller narrowly-scoped stores. In short, I kind of like the idea.
Splitting brand identity is dangerous. I recommend that Main & Vine be incorporated into the current Kroger stores. My local store remodel includes a larger organic section, inclusion of the Simple Truth brands, and more bulk offerings. If the Main & Vine stores are going to have some staple items, why not keep the brand the same and just adjust the stores to the local market with changing emphases on the amount of staples and size of Main & Vine. Separating the brands while offering different combinations of the same items risks diluting brand image which is diluted enough with Kroger stores keeping the brand name of whatever local company that had been purchased.
If nothing else, one phrase in this article stands out and sums up the evolution of grocery in this country over the past…well, really a century now: that 27,000 sf is considered “smaller format.”
I think Kroger is a great company but they aren’t perfect. While they have innovated with the Marketplace concept, they haven’t innovated in terms of developing great food-driven stores in the way that some other companies have. Marianos is an example, but so is Wegmans.
And while the Main & Vine store is smaller, Marianos is not, so I am not sure your thesis is correct.
A couple regional supermarket powerhouses have separate banners food/gourmet forward stores that preceded the creation of the Marianos format. HEB’s Central Market, and Giant-Eagle’s Market District come to mind. Not sure when the United Supermarkets Market Street banner was launched before or after, but it is an example. I am sure there are others. Central Market and Market District stores are huge, just as Wegmans stores are huge.
I don’t believe any of Kroger banners have developed such a store format differentiated within the operations of particular banners. That is an area where Kroger has lagged the best practice of the best regional powerhouses.
Maybe Marianos could help them across banners, just as Market District, Market Street, or Central Market distinguish their specific companies “regular banners” from the upmarket stores.
The big issue is recognizing that cities can be differently served than the standard way suburbs have been served, although increasingly there are plenty of suburbs that want that kind of store as well.
The bfresh format by Ahold is another. Fresh & Easy could have had that market segment had they understood that was the place they should be focusing.
The health and wellness scene is exploding, and nowhere better than to have a new face and new impressions of Kroger. Better than struggling under their old i.d. which would hurt their image of newness and freshness.
I agree with many of the comments but my first thoughts were that they are going to have to beef up the experience of the store far beyond the typical Kroger. I’m a bit biased because I live in Atlanta where Publix far exceeds the Kroger experience, but almost everyone I know in this city does not like shopping Kroger. The typical complaints are uncaring/grumpy associates, messy aisles, slightly unappetizing fresh foods and long lines. Due to this I applaud the separate banner, but the shoppers in these stores will have separate expectations as well — so operations, training and someone in charge of customer experience is going to be a MUST.