Kroger’s Innovations Are Lessons For The Retail Industry

Watching grocery store innovations – efforts designed to improve overall operating efficiency and effectiveness – is important. Food companies are leading the whole retail industry in the adoption of additional money saving ideas. After all, grocery retailers operate on the smallest margins and are always looking for ways to cut costs and still satisfy the customer.

Kroger is a perfect example. They are committed to using both new technologies and strategic partnerships to drive profitable growth. In an effort to move their on-line sales from $10 Billion to $20 Billion, the company has come up with new ideas that they hope will reach that goal. Here are some examples of new initiatives they are working on that other retailers would be wise to consider as well:

1.   Sheds. The key enabler for digital growth may be the “sheds” concept that is being tested. This is an automatic fulfillment technology from Ocado. It may reduce the cost of digital delivery; an important way to partly offset rising labor costs. These dedicated automated fulfillment centers have been tested in under-represented markets to understand demand and impact according to Neil Saunders, managing director of the data analytics and consulting company, Global Data.

2.   Retail Media Network. The company now enjoys 11 million daily store visits and 4 million daily digital visits. Kroger has made an offer to CPG brands that uniquely firms up a relationship for an effective media network. Such a relationship will be a powerful communication platform and benefit all involved.

3.   Kroger ”Rush”. The company has a strategic alliance with Instacart to enable “ultra-fast” delivery of groceries. That would mean that shoppers near any of the chain’s 2700 stores would be able to enjoy this quick service and have their groceries within an hour or less of placing the order.

4.   Demand forecasting. Stores have suffered from out-of-stock positions. This has been especially true during the current pandemic. It can be caused by faulty forecasting or poor stock keeping. Initiatives in this area would save many lost sales from customers that shop in the stores.

By taking these innovative steps, Kroeger KR sees opportunities to significantly increase profits once the implementation of these initiatives is complete. In fact, Retail Wire estimates that Kroger could double profits in pursuing these initiatives. They quote a Kroger spokesman, “I like to say we really have two jobs. Job one is don’t lose the customer, job two is to make money doing that”.

POST SCRIPT: Kroger’s search for faster deliveries and better communications with customers must be applauded. A wise grocery chain store operator suggested to me that the low margins groceries chains operate unde, forces them to look for innovative ways to operate. It could be a blueprint for other general merchandise operators as every business these days need to protect its bottom line profits.