Kroger debuts new store format

by Monica Watrous
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Main & Vine grocery store, Kroger, in Gig Harbor Washington
Kroger's first Main & Vine grocery store opened in Gig Harbor, Wash.

CINCINNATI — The Kroger Co. is testing a new community-focused grocery store concept called Main & Vine. The smaller-footprint format, with its first location in Gig Harbor, Wash., combines local, specialty and everyday products at affordable prices, said Rodney McMullen, chairman and chief executive officer.

Rodney McMullen, Kroger
Rodney McMullen, chairman and c.e.o. of The Kroger Co.

“It re-imagines the modern grocery shopping experience, placing in the middle of the store fresh produce and bulk items, along with an event center where shoppers can enjoy cooking demonstrations, food and beverage tastings and find a new recipe idea for dinner tonight,” Mr. McMullen said during a March 3 earnings call with financial analysts to discuss fiscal 2015 performance. “Customer feedback has been very positive.”

Main & Vine is part of the Cincinnati-based supermarket giant’s broader strategy in “trying different approaches to connecting with consumers,” Mr. McMullen said. The store is designed to serve a customer segment that “we don’t think anybody out there is really serving,” he added.

“As you know, we’ve had phenomenal success in natural and organic over the last several years, and we really see customers continuing to see that as important,” he said. “But with that said, there are certain items where the customer still wants to buy everyday stuff. And when you look at Main & Vine, what we’re trying to do is merge those two pieces but connect at a local level a little deeper than we normally would.”

Describing the concept’s target consumer, Mr. McMullen said it is a shopper who is “overly influenced on speed and convenience for a dinner and a little bit more bent for natural and organic.” Kroger leveraged data from its 84.51˚ customer insights technology unit to determine which items to sell at Main & Vine, offering an expanded fresh assortment, local products such as coffee, cheese and bakery items, and a wide selection of natural and organic products under the company’s Simple Truth brand and national brands, such as Justin’s and Annie’s.

“Needless to say, there’s a lot going on at Kroger,” Mr. McMullen said. “We are creating a seamless experience for our customers, whether experimenting with new formats, driving digital engagement or launching new corporate brand products. We believe that combining Kroger’s culture of innovation with our culture of opportunity will continue to support our growth.”

Main & Vine grocery store, Kroger
Main & Vine caters to consumers who tend toward natural and organic products.

For the fiscal year ended Jan. 30, net earnings attributable to Kroger were $2,039 million, equal to $2.09 per share on the common stock, up from $1,728 million, or $1.74 per share. Sales totaled $109,830 million, up from sales of $108,465 million in fiscal 2014.

Net earnings attributable to Kroger for the fourth quarter were $559 million, or 57c per share, up from $518 million, or 53c per share, in the year-ago period. Sales were $26,165 million, up from $25,207 million.

Kroger achieved identical supermarket sales growth, excluding fuel, of 3.9% for the fourth quarter and 5% for the fiscal year.

“2015 was a big year for our corporate brands portfolio, accounting for more than $20 billion of our total revenue,” Mr. McMullen said. “During the quarter, corporate brands represented approximately 29% of total units sold and 26.2% of sales dollars, excluding fuel and pharmacy. Simple Truth continues to grow at an incredible rate, setting sales records quarter after quarter. The brand reached $1.5 billion in revenue for the year, and already in 2016, Simple Truth expanded to be a true lifestyle brand with the introduction of Simple Truth household, personal care and baby products.

“We expect 2016 to be an exciting year of continued innovation throughout our corporate brands portfolio.”
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