Lessons from Kroger

One of the most interesting things I learned about Kroger this semester was how diversified they were.  Before, when I thought of Kroger, I thought of just supermarket.  I had no idea that it was involved in as many different businesses as it is.  There are 16 supermarket brands under the company, the multi-department store Fred Meyer, several convenience stores, and 4 jewelry store brands.  It also offers financial and medical services.  Kroger is becoming a one stop shop for customers.  Kroger has a very strong organizational culture and is very involved in local communities.  Kroger competes with Wal-Mart for customers.  However Kroger is not about having the lowest price.  Kroger's strategy is to provide shoppers with a better overall shopping experience.  Sometimes Kroger will have a lower price and sometimes it won't.  But Kroger counts on its focus on customers as being the main factor that keeps its customers returning.  Kroger is more concerned with focusing on its loyal existing customers than dropping prices significantly to attract new customers.  The loyal customer is Kroger's main target group.

The Little Clinic

I was in the Madisonville Wal-Mart Friday and noticed that there is now a clinic inside the store.  It got me to wondering if Kroger also offered medical services in its stores.  There is not a clinic in the Madisonville Kroger but there are some clinics in stores in other parts of Kentucky as well as Arizona, Colorado, Ohio, and Tennessee.

The Little Clinic offers medical care on your schedule, in your neighborhood –– right where you grocery shop. Clinics are staffed by Board Certified Nurse Practitioners (BCNPs) and Physician Assistants (PAs) that treat common illnesses and minor injuries. They also provide wellness care; like routine check-ups, screenings and vaccinations. Plus, they can prescribe medication when you need it.

No appointment is necessary, the clinic is open 7 days a week (including weeknights), and accepts most insurance plans.

http://www.thelittleclinic.com/default.asp?store=Kroger

Kroger Helping Fight Hunger During the Holidays

Kroger has focused on feeding the hungry for decades. From the Great Depression to the Great Recession, Kroger has partnered with local food banks, Feeding America and other organizations to fight hunger in local communities.  Now customers who shop at any of Kroger's family of stores can help, too, by taking advantage of simple donation opportunities while they shop.

--Making a financial donation to a local food bank is as easy as scanning a pre-marked tag or asking the cashier to 'round up' a grocery order.  Customers can take advantage of this option in all Kroger, City Market, Dillons, Fry's, Jay C, King Soopers, QFC, Ralphs and Smith's stores.


--Pre-filled bags of nutritious food can be purchased and added to collection barrels at Kroger stores in Alabama, Georgia, Illinois, Indiana, Kentucky, Louisiana, North Carolina, South Carolina, Tennessee and Texas and QFC stores in Washington and Oregon.  


--Specially-marked coin boxes will collect spare change at check stands at Kroger stores in Kentucky, Michigan, Ohio, Tennessee and Texas, and in all City Market, Dillons, Fred Meyer, Food 4 Less, Fry's, Jay C, King Soopers, QFC, Ralphs and Smith's stores.


--A number of stores across the country will host major food drives on site, partnering with local media outlets to raise awareness and much-needed food for local hunger agencies.

In 2009, Kroger stores and customers partnered to provide nearly 16 million meals to local families during the holidays.  Kroger donated 50 million pounds of food valued at more than $75 million in 2009, which translates into roughly 42 million meals for hungry families.

Through special partnerships with key vendors, Kroger directs even more funding to food banks in communities where its customers and associates live and work.  Bringing Hope to the Table, Kroger's annual cause-marketing campaign, raises $3 million in financial support and food valued at $1 million to assist more than 80 food banks that are members of Feeding America, the nation's largest domestic hunger relief organization.

In addition, Kroger's industry-leading food rescue program – the Perishable Donations Partnership (PDP) – continues to grow and direct more fresh meat, produce, dairy and bakery items that can no longer be sold in retail stores to food banks that are equipped to handle it.  Through the PDP, Kroger donated more than 36 million pounds of fresh food in 2009, the equivalent of 30 million meals, and the company is on target to exceed that level in 2010.

http://finance.yahoo.com/news/Kroger-Fights-Hunger-During-prnews-2604181917.html?x=0&.v=2

Kroger Continues Partnership with Salvation Army

The Salvation Army's iconic Red Kettles will once again ring in the season at The Kroger Co.'s family of stores. Customers and associates generously support the campaign each year, helping provide food, clothing, toys and social services in the communities where funds are raised.

In 2009, Kroger customers and associates contributed $11.3 million to the campaign, which represents 8% of the record $139 million raised nationwide. All funds collected are used locally in the community where the donations are raised. The Red Kettle campaign enables The Salvation Army to assist 30 million Americans in over 5,000 communities across the country.

Lynn Marmer, group vice president of Corporate Affairs for Kroger, was quoted as saying "The annual Red Kettle campaign lets our customers and associates make a real difference in the lives of their neighbors in need, one small donation at a time.  We value our long-standing partnership with The Salvation Army and the impact the campaign makes in the communities we serve."

http://finance.yahoo.com/news/Kroger-Family-of-Stores-prnews-251488587.html?x=0&.v=1

Stock Price 11/26/10

Closing price for 11/26/10 was $23.07 up $.24 from 11/19/10.

Kroger offers fully prepared Thanksgiving meal

I was searching on the Kroger website for the weekly ad in the Madisonville area and noticed that Kroger is offering a fully prepared Thanksgiving meal.  The meal is heat and serve and takes approximately 2 1/2 to 3 hours to prepare.  It serves 8-10 people and includes: Whole Turkey; (1) 1 lb Cranberry Relish; (1) 2 lb Turkey Dressing; (1) 48 oz Mashed Potatoes; (1) 1 lb Giblet Gravy; (1) 12 ct Dinner Rolls; (1) Pumpkin Pie, 8 Inch.  All of this can be had for $39.99.  I don't cook but this seems like a good deal to me.

http://louisville.inserts2online.com/customer_Frame.jsp?divID=024&drpStoreID=00563

Stock Price 11/19/10

Closing price for 11/19/10 was $22.83 down $.16 from 11/12/10.

Flying Fruit Lid

The things people sue over....this is an article about a man who filed a lawsuit against Kroger and Del Monte Foods over a jar lid that exploded off a jar and hit him in the face.  Kroger and Del Monte offered a $150,000 settlement, but the plaintiff refused the offer.  Did I mention that the reason the lid exploded off was because he tried to open the jar by hitting it with the handle of a screwdriver??!!??

A grocer and a fruit company have offered a $150,000 settlement to a man who says he was knocked unconscious when a lid exploded off a jar of fruit and hit him in the face.  Del Monte Foods of San Francisco and Cincinnati-based Kroger Co. insist there's no credible evidence the jar was unsafe. They made the offer Tuesday after a judge refused to dismiss the lawsuit by Darryl Alexander of Southfield, Mich.  Alexander's lawyer, Mark Miller, says the offer is too low because Alexander has permanent eye damage.  Alexander says the stubborn lid flew through the air and struck him in the eye after he hit it with the handle of a screwdriver in April 2008. He said he first placed the jar of Orchard Select mixed fruit under warm water.

http://finance.yahoo.com/news/Flying-fruit-lid-sparks-150K-apf-3459307520.html?x=0&.v=3

Kroger and 2010 Daytona 500

This article is several months old but it talks about how Kroger advertised itself during the 2010 Daytona 500.  Sponsorship on NASCAR race cars is very expensive, but Kroger was able to get their name on three cars for free. Cincinnati-based Kroger took the full paint scheme on Marcos Ambrose's No. 47 Toyota, and the rear panel on Kyle Busch's No. 18 Toyota and Clint Bowyer's No. 33 Chevrolet. The placements were the result of a trade-out between Kroger and the regular sponsors on those cars.  Ambrose is sponsored by a collection of consumer-packaged goods, including Kimberly-Clark (Kleenex), Kingsford and Little Debbie. Busch is supported by Mars, and Bowyer by General Mills.  In exchange for the regular sponsors giving advertising space on the cars to Kroger, those sponsors use the trade-out to drive additional displays in Kroger's nearly 2,500 stores.

Kroger also locked down an extension on its deal with Daytona International Speedway through the 2014 Daytona 500. Kroger is recognized as Daytona's retail licensing partner.  Kroger came on board in 2007 and ran the largest retail promotion in NASCAR history leading up to the 50th running of the 500 in 2008. More than 50 brands participated with special Daytona 500 packaging.  From April 2009 through this year's race February 2010, 55 brands across 23 companies had used the special 500 packaging and discounts.

http://www.nascar.com/2010/news/business/02/25/kroger.budweiser.daytona.500/index.html

Glass fragments in frozen vegetables

A voluntary recall has been issued for certain frozen vegetable manufactured by Pictsweet Company out of Tennessee.  Pictsweet manufactures store branded frozen vegetables for both Kroger and Wal-Mart.  Kroger branded peas and carrots and Wal-Mart Great Value branded peas and mixed vegetable have recently been identified as having glass fragments in them. 

http://www.usaliveheadlines.com/1043/glass-fragments-spark-frozen-vegetable-recall-at-walmart-kroger.htm

Fuel discounts on gift card purchases

Kroger's Delta Division, based in Memphis, TN currently operates 111 stores and 60 fuel centers in five states under the Kroger banner in Memphis and West Tennessee, Arkansas, Mississippi, Southern Missouri, and Southwest Kentucky.  The division is offering a holiday promotion where beginning Nov. 21 and continuing through Dec. 11, 2010, Kroger will offer customers fuel savings of 40¢ off per gallon (123 REWARDS MasterCard Customers receive 45¢ off per gallon) for every $100 in gift cards purchased.  Customers can even mix and match gift cards to reach the $100 threshold.  Even if you did not want to give a gift card as a present, you could buy the gift cards and then use the gift cards to purchase the gift allowing yourself to save on fuel.

http://www.katv.com/Global/story.asp?S=13504277

Stock Price 11/12/10

Closing price for 11/12/10 was $22.99 down $.12 from 11/5/10.

Undercover Boss

Kroger Co CEO David Dillon frequently joins shoppers at Kroger stores in an effort to see one of his stores through the eyes of a customer and to help identify why the shopper makes the choices he/she does.  Dillon tells Wall Street analysts that the nation's largest traditional grocery chain has sophisticated consumer data none of its competitors can match. But he still frequently does shopalongs, visits consumers in their homes and peeks into their cupboards, shops stores alone and incognito, and drops in on employees unannounced.  Such up-close-and-personal study of consumers, employees, and stores has been part of the management style of an executive whose grocery experience goes back four decades to his family's Dillon's grocery chain.  By being in the stores, by doing the shopalongs, Dillon personally commits himself to making Kroger a better company on Main Street, which makes it a better company on Wall Street.  Shoppers are urged to be critical. They usually aren't aware that Dillon is a Kroger employee, thinking he is a market researcher and making it more likely they will speak bluntly.  Their feedback, combined with data, has led to changes in staffing, training and technology to create faster checkout lines, more-helpful employees, and cleaner stores with better presentation.

http://news.yahoo.com/s/ap/20101110/ap_on_bi_ge/us_ceo_goes_shopping

Gas Perks in Indiana

In an attempt to lure more shoppers to its stores in Indiana, Kroger Co. is offering price breaks on gasoline to their loyal customers.  Kroger launched a rewards program that lets shoppers who load up on groceries earn up to $35 a month in free gas at Kroger fuel centers.  The revised program, which applies to all Indiana stores in Kroger's Central Division, is in 10-cent increments.  For each dollar spent inside Kroger, customers receive one point.  Customers who earn 300 points would get 30 cents off per gallon, those who earn 500 points, 50 cents off -- and so on.  Earn 1,000 points in a month and get $1 off per gallon, up to 35 gallons.

Kroger is hoping the program will not only help it stand out in one of the most saturated grocery markets in the nation, but also will break through the crowded field of gasoline savings programs.  Kroger acknowledges that the program will cause it to lose money on gasoline but is hoping it will more than make it up in increased grocery sales.  This program could provide Kroger a differentiated strategic advantage over other grocers.

http://www.indystar.com/article/20101104/BUSINESS04/11040411/Kroger-pumps-up-gas-perks

Overcharging Scandal in Los Angeles

Ralph's is a supermarket that is under the Kroger Co banner.  In May 2010 in Los Angeles criminal charges were filed against Ralphs and parent company the Kroger Co accusing them of overcharging for goods.  The city attorney filed 14 counts of false and misleading advertising along with other charges, including false labeling and unlawful computation of value. Both Ralphs and the Kroger Co faced fines and penalties of up to $256,000.  Undercover inspections visited 14 Ralphs stores across Los Angeles between January and March and found customers were being gouged for prepackaged and weighed products including fried chicken and salad.  Inspectors from the county's Department of Weights and Measures discovered 27 violations. Most of the violations involved the store illegally charging for the weight of the package, or including the ice glaze on frozen products in the net weight, authorities said. Some prepackaged items also were found to be under the weight on the label.

I have not been able to find out if the companies were found to be at fault.

http://www.meattradenewsdaily.co.uk/news/210510/usa___supermarket_over_charging_scandal_.aspx

Stock Price 11/5/10

Closing price for 11/5/10 was $23.11 up $1.11 from 10/29/10.

Supplier Diversity Part 2

Dr. Busija has asked about the ratio of Kroger's diversity vendors versus the overall total vendors.  While I have not been able to find a exact number of total vendors I have found that they are in the multiple thousands.  Of these, Kroger has utilized the services of 1,024 women and minority owned businesses.  Below is an except from Kroger's sustainability report (page 26).

"In each year from 2006–2009, Kroger spent more than $1 billion with minority and women-owned business enterprises (MBEs and WBEs). As a result, Kroger is a member of the Billion Dollar Roundtable, a prestigious forum of 17 corporations that have achieved $1 billion or more in annual spending with M/WBEs. We achieved this goal by partnering with more than 1,024 M/WBE companies."

http://www.thekrogerco.com/documents/KrogerSustainReport2010.pdf

Electronic Data Interchange

I found something interesting tonight regarding how Kroger deals with its vendors in its supply chain activities.  Kroger uses Electronic Data Interchange, or EDI, as an integral business strategy to increase customer satisfaction. Several years ago, Kroger began trading EDI documents and saw first hand how doing so takes cost out of the supply chain. Kroger wants to pass this cost savings onto customers and drive sales, mutually beneficial for both Kroger and its vendors.  Kroger requires vendors to accept purchase orders and submit invoices via EDI. 

Vendors who do not submit an EDI Partner Set-Up Form prior to doing business with a Kroger division will receive a formal notice from that Kroger division with a given time frame to establish an EDI connection. Vendor compliance to EDI requirements must be met before the end of the specified time. Should the vendor not send or receive documents electronically after the compliance deadline, a $150.00 assessment will be applied against all future payments until EDI compliance is met to help offset the cost of manual processes.

http://edi.kroger.com/faq_001.htm

Retail Division Buying Decisions

Kroger has established a corporate-wide focus on operations, merchandising, and support systems.  This structure enhances Kroger's ability to achieve synergies from economies of scale throughout the company.  Kroger has 17 retail divisions, which are organized on a geographic basis. Kroger's Merchandising Group ("KMG") in Cincinnati directs and coordinates most of the company's retail buying process by bringing together top merchants in almost every major category to develop strategies and direct merchandise selection.  While most of the Company's merchandise selections are driven by KMG teams, local retail divisions round out their merchandise by directly buying items that reflect local preferences. This allows Kroger retail divisions to tailor their stores' offerings to meet local market demographics and regional preferences. These items are purchased by division buyers from suppliers that can offer quality and outstanding service at a competitive price.  The organizational structure of Kroger supports the local divisional merchandising and operating strategies that are targeted to customers in each local market. Kroger's retail divisions implement merchandising, pricing and operations that address local market conditions.

http://www.thekrogerco.com/supplier/supplierdiversity_doingbusiness.htm