Kroger makes sense of consumer contradictions
Kroger CEO Rodney McMullen said earlier this year that no other retailer “has the customer data and the insights” that his company has. He’s once again pointing to his company’s understanding of its customers to explain its ability to continue growing sales and earnings, even when matching up against 2020’s pandemic-fueled comps.
The retailer posted a 3.1 percent gain in same-store sales, excluding fuel, for the third quarter. Adjusted earnings per share came in at 78 cents. Both figures were above Wall Street’s expectations.
Mr. McMullen, speaking on Kroger’s earnings call yesterday with analysts, said his company continues to benefit from the eat-at-home trend that began last year. He said that cooking home meals is “more affordable, convenient, and healthier” than other options and has the additional benefit of bringing families together. Kroger saw clear evidence of this at Thanksgiving.
“Customers engaged in larger celebrations with friends and family compared to last year. We also saw them continuing to cook at home, leading up to and during the holiday, and select more premium products to elevate the food experience,” said Mr. McMullen.
Kroger’s CEO said the company’s consumer insights clearly point to the need for flexibility if it is going to continue growing its share of the market. He pointed to research showing 70 percent of consumers planned to do more of their holiday shopping in stores.
“At the same time, 84 percent of consumers said that they will continue to shop online the same amount or more in the future,” he said. “These seemingly contradictory behaviors are exactly what Kroger’s seamless ecosystem was designed to accommodate.”
Kroger’s third quarter digital sales were up 103 percent compared to the same period in 2019 as the company remains committed to doubling its online revenues to $10 billion by 2023.
Mr. McMullen said customers are feeling the effects of rising prices and the company is using its data and financial resources to help them stretch their budgets.
“We deliver value when customers need it the most with personalized promotions, big packs and dynamic holiday offerings. Our brands also offer our customers flexibility within their spending without compromising, thanks to the wide variety of incredibly high-quality and innovative products at various price points.”
- Kroger Reports Third Quarter 2021 Results and Raises Full-Year Guidance – The Kroger Co.
- Kroger (KR) Q3 2021 Earnings Call Transcript – The Motley Fool
- Kroger CEO says no one has the ‘data and insights’ that it has – RetailWire
DISCUSSION QUESTIONS: What do you see as the most important factors driving consumers’ grocery shopping behaviors at this time? What operational boxes must grocers check off to stay aligned with how Americans want to shop for food?