Kroger won’t concede its market share
Grocery market competition will grow even more intense in Wisconsin in 2018, but Kroger Co. Chief Executive Officer Rodney McMullen has no intention of conceding any market share to competitors in the state.
As it has since acquiring Milwaukeebased Roundy’s Supermarkets Inc. in 2015, Kroger intends to aggressively compete on price in Wisconsin, McMullen said. That’s important, because Kroger controls about a third of the grocery market across the state.
“We will not give up business to anybody,” McMullen said in a Thanksgiving week interview with the Milwaukee Journal Sentinel. “We’re looking to grow our business and always have been.”
Cincinnati-based Kroger is the world’s third-largest retailer measured by sales, behind Walmart and Costco, according to National Retail Federation data. When measured only by U.S. sales, Kroger is the second-largest retailer, behind only Walmart. Costco is third.
“We’ve made price investments and we will continue making price investments in 2018 as well,” McMullen said. “Absolutely
we will.”
Kroger employs 443,000 people who serve about 8.5 million customers each day across 35 states. The company operates nearly 3,000 retail food stores. It had full-year 2016 sales of $115.3 billion.
It operates 38 food manufacturing plants and 17 dairies.
McMullen, 56, grew up on a farm in northeastern Kentucky and has spent more than 37 years at Kroger, starting out as a part-time stock clerk in 1978. He became CEO in 2014.
Big presence in Badger State
In Wisconsin, Kroger employs more than 13,000 people. Of those, about 7,500 work at 60 stores in metro Milwaukee and at the former Roundy’s headquarters in downtown Milwaukee.
The company operates the Pick ‘n Save, Metro Market and Copp’s stores in Wisconsin and the Mariano’s chain in the Chicagoland area.
Roundy’s, which is now a wholly owned subsidiary of Kroger, also has a commissary in Kenosha and a massive distribution facility in Oconomowoc. Roundy’s itself has two divisions: the Wisconsin division and the Mariano’s division, which is focused on Chicago.
Across Wisconsin, the company operates 107 stores.
The battle for grocery supremacy will take place one customer, one store and one online transaction at a time, according to McMullen.
“We would consider the competitiveness of Wisconsin similar to most markets,” McMullen said. “We always assume the markets will become more competitive.
“In the supermarket business, I guarantee you that competition will continue to increase.”
An industry in transition
Kroger is transitioning into a business that will be wherever its customers are, whether that means brick and mortar or online.
It’s a transformation that is ongoing, McMullen said.
“In the supermarket business, usually every 12 to 14 years you have to reinvent yourself. Usually, that reinvention takes three or four years,” he said. “We’re in the middle of that reinvention process.”
That means the company will continue to expand its online Clicklist — its online selection and customer pickup program — at stores in Wisconsin.
The company also plans to continue remodeling existing stores in the Milwaukee area and will begin to look at possibly expanding beyond 2018.
“If you look at 2018, what we’ll continue to do is build on the foundation that we have put in place,” McMullen said.
Since the Roundy’s purchase in 2015, Kroger’s investment in price cuts, store experience and store remodels in Wisconsin has been worth more than $250 million, the company says.
In Milwaukee and Wisconsin, “I would not expect for you to see a new physical store in 2018,” McMullen added. “I can tell you that we are working on specific sites, but for us the sites will take longer than (a year) to put together.
Meanwhile, Kroger has implemented its data systems into its Wisconsin stores and will seek to increase its use of targeted data to seek to enhance the customer’s experience at stores and online, McMullen said.
“We have the systems now in place to use data much more effectively so that we can connect with our customers one on one — even better than what we have done in the past,” he said.
Kroger will also seek to expand its discount for fuel purchases — anything that stretches a customer’s budget while at the same time offering a value proposition that will keep customers coming back, McMullen said.
“Customers have a lot of options on where they can shop,” McMullen said. “Help someone fall in love with food or help them have a smile, that’s where our associates really have an opportunity to shine.”
Surrendering market share is not part of the plan.
“Our business continues to move in the right direction and grow,” McMullen said.