The trend in grocery retailing is for merchants to contract out production for private label items. One of the exceptions to that rule would be Kroger, which today manufactures roughly half of the 14,400 private label products it sells.
By manufacturing its own items, Kroger believes it has better control over production decisions and pricing.
"Speed to market
is a benefit," Krista Faron, a senior analyst for market research firm
Mintel International, told The Associated Press."To the extent
that you can control your production and manufacturing and getting it
on your shelf faster, that helps."
"We're growing significantly in what we make," said Calvin Kaufman, president of Kroger manufacturing. "We are adding shifts as well as adding people, and we keep getting more efficient to add to capacity."
Discussion Questions: What do you see as the pros and cons of retailers manufacturing private label goods themselves versus contracting production out? Will we see more companies follow Kroger's lead and increase manufacturing operations or go the other way instead?