How Kroger’s private brands fit in with new identity

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How Kroger’s private brands fit in with new identity

By Lawrence Aylward - 11/06/2019
Kroger's Joe Grieshaber: Private brands are our competitive advantage.

The Kroger Co. is on a mission to create a brand-new brand identity. The Cincinnati-based grocer announced its brand transformation plan on Nov. 6, which includes an updated logo and a new tagline — Fresh for Everyone — as part of the campaign.

When speaking of the brand transformation plan, Kroger’s Executive Vice President and Chief Operating Officer Mike Donnelly talked about the retailer deepening its connection with customers and providing an elevated creative approach. There’s no doubt that Kroger has been able to do that successfully with its private brands, known as Our Brands. Surely, Kroger's Our Brands, one of the most successful and popular private brands programs in the U.S., will play a key role in the brand transformation.

On Nov. 5, during the retailer’s investor conference at the New York Stock Exchange, Kroger’s Senior Vice President of Merchandising Joe Grieshaber talked about the competitive advantage Kroger has with its Our Brands, which include Simple Truth, Private Selection, Kroger and other lines.

“Sales of Our Brands continue to grow faster year-over-year than our total store sales,” Grieshaber said, noting that Our Brands have also grown customer loyalty and enhanced gross margin. He added that the higher-margin store brands — Private Selection, a premium line, and Simple Truth, an organic and natural line — are particularly strong in growth.

“Private selection is purchased by more than 30 million households, and is growing at over 7% [year-over year],” Grieshaber noted during the web presentation of the investor conference on the company’s website. “The brand is a point of difference.”

Simple Truth enjoys 32% share of the natural and organic branded foods category, and is delivering double-digit growth year-over-year, he added, noting that Kroger continues to introduce new products to the line. Simple Truth Plant Based, which Kroger announced in September, is an extension of Simple Truth and includes 22 plant-based products. Nearly 60 items will be added to the line in 2020.

Kroger’s mainstream private brand, Kroger, had more than $13 billion in sales in 2018 and also continues to grow, Grieshaber said.

Citing research from market researcher IRI’s 2017 Brand Equity Study, Grieshaber said the retailer’s Kroger, Private Selection and Simple truth brands had a net promoter score of 30-40% higher versus comparable tier national brands and private brands.

Putting in action its new tagline — Fresh for Everyone — Grieshaber said Kroger is “laser focused” on improving quality in the segment.

“Customers tell us they choose the stores they shop based on nine key categories — and they are all fresh,” he added. “Produce, meat and dairy lead that list.”

He said Kroger is seeing double-digit growth in fresh meals, from meal kits to ready-to-cook items to ready-to-eat foods, and he expects that momentum to continue in 2020.

“Our customers tell us again and again they want to get everything in one location,” Grieshaber said. “The Fresh for Everyone [tagline means that] everyone deserves to have affordable and easy-to-enjoy fresh food.”

Grieshaber also talked about the importance of personalization to grow loyalty. He said Kroger’s “loyal households” are its most valuable customers, representing 70% of its sales.

“They are eight times more valuable than our non-loyal customers, and they visit our stores four times more frequently,” he added.

Grieshaber mentioned “innovation” several times during his presentation, including how vital innovation is to private brands in part to personalize the products.

“We utilize best-in-class personalization science to send the right offers to the customers based on their shopping habits and their household needs,” he added. “We are evolving it to increase frequency, expand reach and emphasize reward offers to drive more trips.”