Kroger, disheartened by some fourth quarter results, is looking toward fresh and prepared foods initiatives to help boost sales.
Kroger Chairman and CEO Rodney McMullen said the company was “disappointed” with identical supermarket sales in the fourth quarter and results, FIFO operating margin and return on invested capital.
McMullen said opportunity in the $1.5 trillion total food business is on the perimeter of the store. “We continue to get more aggressive in terms of fresh food, fresh food prepared, what’s for dinner and picking things up and that continues to grow well for us,” he said. “So we really see that that continues to be a large growth opportunity. And I would say, at the moment, we can see the opportunity more than the things that we're doing.”
That opportunity apparently includes more emphasis on in-store dining. “And one of the things that we've been very pleasantly surprised is the willingness that our customers are to eat in one of our stores and we believe that that will be an opportunity to grow the business and create a new leg, a platform for growth. So it's really both of those things together,” McMullen said.
McMullen said initiatives with high-quality fresh and prepared foods are designed to deliver convenience to shoppers and will continue to big focus with both the company’s capital and customer-first investments.
“We continue to see very much where people are increasingly spending money in the fresh departments,” he said. “So there is no doubt there is a shift in tonnage from the center store to the perimeter and that’s been a long term shift and that hasn’t changed. If you look at the center store, we would still see tonnage growth there but remember that’s an organic part of what’s driving that growth.”
Kroger also recently announced the acquisition of Murray’s Cheese and a merger with specialty pharmacy leader ModernHEALTH.