Milling & Baking News Corporate Profiles - 2019 - 94

COMPANY OVERVIEW

Kroger Co.
Retailer makes progress in creating an omnichannel model
he Kroger Co.'s march toward creating an
omnichannel business model continued
in 2019. Management hopes investments
made during the year will set a foundation that
will support growth in 2020 and beyond.
"We are building a platform of seamless
experiences to serve customers anything they
want, anytime they want, anywhere they want,"
said William Rodney McMullen, chairman and
chief executive officer of the Cincinnati-based
company, during a conference call with financial analysts Sept. 12. "We know the seamless
experience is essential to the customer experience, both today and tomorrow, which is why
we continue to invest heavily in our capabilities
in this area."
Investments include expanding Kroger's partnership with the online supermarket company
Ocado. In June, the two broke ground on the first
customer fulfillment center in Monroe, Ohio. In
July, Kroger and Ocado announced plans for a
new customer fulfillment center in Forest Park,
Ga. In September they said another fulfillment
center will be in Dallas.
"Our partnership with Ocado will introduce
transformative ecommerce, fulfillment and logistics technology in the U.S. and bring customers
fresher food faster than ever before, accelerating

our ability to provide anything, anytime, anywhere," Mr. McMullen said.
Kroger expanded its digital coverage area to
95% of its customers in the United States in 2019.
"This means that 95% of our customers who
shop Kroger at a brick-and-mortar store can also
shop with us for pickup or delivery," Mr. McMullen
said.
More promising, the retailer's digital sales
grew 31% during the second quarter of fiscal
2019, ended Aug. 17, according to the company.
"Importantly, we are starting to see improving
operating profit trends in our digital business,"
Mr. McMullen said. "Our digital business is becoming less of a headwind, which is an important inflection point, and we continue to invest
in new capabilities to support our transition to
seamless. However, I do want to note, this is still
a significant investment for the company."
Other initiatives undertaken by the company
during the year include investing in consumer

brands and responding to consumer trends.
Kroger is partnering with Lindsay Goldberg,
a private investment firm, in forming PearlRock
Partners to identify, invest in and help grow consumer product brands. The platform will leverage
the customer data and predictive analytics capabilities of Kroger subsidiary 84.51°.
"We are confident this partnership with Lindsay Goldberg will help discover and cultivate
new brands that Kroger customers will love,"
said Stuart Aitken, senior vice-president of alternative business at Kroger and c.e.o. of 84.51°.
Plans also are underway to extend the company's Simple Truth brand into the meat and
dairy alternative category. New products offered
will include meat alternatives like fresh burger
patties, ground applications, sausages and deli
slices as well as cream cheese, French onion
dip and queso.
Kroger also divested its Turkey Hill business to
the private equity firm Peak Rock Capital. Financial terms of the transaction were not disclosed.
Turkey Hill produces iced teas, fruit drinks,
milk, frozen dairy treats and ice cream products
at a manufacturing and distribution facility in
Conestoga, Pa., with nearly 800 full-time, parttime and seasonal employees. Kroger had owned
the business since 1985. CP

Chief executive officer -
William Rodney McMullen

Kroger net earnings

Kroger net sales

(fiscal years ended in January)

Kroger share price

per share
$32

$1,975

2017

94 \ November 2019

$1,907

2018

$3,110

2019

in millions

$29
$26

$115,337

$122,662

$121,162
$23

2017

2018

2019

$20
Oct.
2018

Dec.

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Milling & Baking News Corporate Profiles - 2019

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