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Kroger’s Digital Push Drives Sales in 2019

The Krogers Co.’s focus on digital paid off in first quarter 2019, as the supermarket chain benefited from improved stores and a focus on faster delivery, reported Seeking Alpha.

The company’s digital coverage area expanded to 93% of Kroger customers during the time frame and will expand to 100% by the end of 2019. This means eventually all customers who shop Kroger in a brick-and-mortar store will be able to shop with them for pick-up or delivery as well.

Under its “Restock Kroger” program, the company highlighted private label brand display, rearranging store layouts and expanding services such as home delivery and self-checkouts.

“While the second year of Restock Kroger is off to a solid start, we know we can do better when it comes to our identical sales results,” said CEO Rodney McMullen on an earnings call. “By further intensifying our customer focus, Kroger’s quarter-to-date identical sales are trending better than the first quarter and moving toward the guidance range.”

Additionally, Kroger’s most powerful competitive advantage, and one of its best ongoing performers, is its private label products which grew 3.3%. The focus on shifting the mix to Simple Truth and premium brands such as Private Selection led to double-digit gains in the quarter in those brands.

Customer’s new favorites items included Private Selection Pork Belly Bites, Private Selection Artesian jerky, and Kroger Deluxe Unicorn Swirl ice cream – falling in line with the key food and flavor trends it predicted for 2019. New items delivered over $225 million in incremental sales during the first quarter.

“We know that our customers love our brands and that they are hungry for innovative new products that they can only get by coming to and shopping with Kroger,” said McMullen. “In our quest to put food first and serve as America’s food authority, we are bringing new tastes, trends and experiences to our customers.”

Digital sales grew 42% in the first quarter as the company’s efforts are positioning it to be the leading omni-channel retailer in the food industry, McMullen said. Since 2014, Kroger has gone from no digital sales dollars to a 2018 annual run rate of about $5 billion, trending toward a $9 billion digital sales run rate in the future.

Meanwhile, the company continues to improve its customer experience in stores and online by partnering with industry innovators such as Home Chef, Microsoft, Ocado and Walgreens. “Each partner shares our passion for exploring the nexus between technology and innovative customer experiences,” noted McMullen.

“Kroger’s partnership with Ocado will for the first time introduce transformative e-commerce fulfillment and logistics technology in America,” said McMullen. “This in turn means Kroger customers will get fresher food faster than ever before.” Kroger intends to open additional customer fulfillment facilities, replicating the model to serve people across the U.S.