KROGER CEO ON THE WHY OF HOME CHEF AND OUR BRANDS
Customers are telling Kroger that “they found they really enjoyed eating together as a family because they have gotten so busy and they felt like they were able to reconnect,” according to Rodney McMullen, Kroger’s chairman and CEO. During a March 15 Bank of America investor call, he noted that during COVID, people learned (or re-learned) how to cook at home. “What people are telling us is they are continuing to leverage that and they are more aggressive now inviting people over to show off some of their skills as well.” This actually ties to Kroger’s merging with Home Chef in 2018. “That was one of the reasons behind merging with Home Chef,” McMullen said. “I always remind people that food away from home — over half of it is eaten at home. They just buy it somewhere else. That’s a huge opportunity for us.” And with shoppers’ budgets hurt by inflation, they are shifting from branded products to more private label (what Kroger calls “Our Brands”). McMullen said Kroger’s Our Brands business has grown in the double digits during the past few quarters, and shoppers are using more coupons and eating at home more often. And why it is called “Our Brands?” As McMullen explained, “The reason why we call it Our Brands is we look at it as a brand, and our customers look at it as a brand. And we invest behind Our Brands. If you look at the talent in that organization, probably half of them came out of either some type of marketing company or CPG.”
CLUBS’ 11% GROWTH IS
NEARLY DOUBLE GROCERY’S
“The U.S. warehouse club industry has grown at a 6% rate since 2007… The past five years have been especially exciting, growing at an 11% rate, outpacing broader retail at 8% and grocery at 6%… The industry is still less than 5% of total retail. So we believe there is much more growth to come.” — Bob Eddy, president and CEO, BJ’s Wholesale Club, during a March 10 conference call.
10% INFLATION SEEN FOR EGGS IN ’23
“For 2023, we have projected about 10% cost inflation, driven by an increase in farmer pay, increases in packaging and some in commodities. And in Q4, we offset the majority of increases coming through, other than the late-breaking farmer increases, which is another reason for the January price increase.” — Bo Meissner, CFO, Vital Farms.
DG ADDING 66,000
MORE COOLER DOORS
Dollar General is now delivering perishable products to more than 19,000 stores from 12 self-distribution facilities, producing cost savings and “significantly enhanced profitability,” said Jeffery Owen, CEO of the company during a March 16 call. DG’s perishables department had the strongest rate of comp sales growth during 2022, the year it added more than 66,000 cooler doors across its store base. It plans to install a similar number of cooler doors this year.
GOOD NEWS & BAD NEWS
In last year’s fourth quarter, the company achieved its highest average order value of $73.15, according to a March 16 conference call. Net loss for the quarter was $21.8 million vs. $26.4 million in the year-ago period. But the full year net loss rose to $109.7 million vs. $88.4 million year-ago. Average revenue per customer in the fourth quarter was $358, a company record. Total customers during the 12 months ended Dec. 31, 2022, was about 659,000, down by 3% vs. 2021. The fourth quarter’s customer count fell 11.2% from the year-ago period. Partnerships with Walmart and Amazon, launched last year, are not material to Blue Apron revenue. Starting in Q3 2022, Blue Apron cut media/marketing spend and began a shift away from TV and out-of home, in favor of digital channels. Cost of new customer acquisition fell by 50%, and conversion rates climbed.
SHOPPED DRUNK LATELY?
About one in six (17%) Americans has shopped while under the influence in the last 12 months, spending roughly $309 each — for a total of $14 billion. That’s according to Finder’s newly released Drunk Shopping Survey. According to the New York-based information service, food and apparel tied for the most-shopped categories, at 47% each. Not surprisingly, 26% of men (vs. 10% of women) had shopped drunk. Also not surprising: the top drunk shopping option for women are shoes, clothes or accessories (50%) while for men, it was food (47%). n