Kroger’s McMullen: ‘Our brands are in more homes than ever before’

In his annual letter to company shareholders this week, Rodney McMullen, chairman and CEO of The Kroger Co., mentioned the Cincinnati-based retailer’s store brands as a bright spot in 2016.

“Our brands are in more homes than ever before,” McMullen said. “We sold a record number of units last year. In fact, our customers fill their carts with more than 1.25 million corporate brand items every hour. Simple Truth grew at an impressive rate again in 2016, reaching total sales of $1.7 billion. Simple Truth Organic accounted for more than $1 billion of that total.”

Ten years ago, natural and organic was not a central focus in Kroger’s stores because it was not a central focus for its customers, McMullen said.

“Today, natural and organic foods are integral to our success — indeed, they are the products our customers have come to expect — and reached $16 billion in annual sales in 2016,” he added.

McMullen said Kroger must continue to adapt to its customers’ ever-changing needs in order to continue to win market share.

“As a result, we regularly evolve our Customer 1st Strategy based on where we believe and anticipate the customer is going,” he said. “We’re constantly mining our data to assess product trends, making careful judgments about what customers will want three, five and even 10 years from now. So while our overarching strategy doesn’t change, the tactics we put in place to execute the strategy will.”

McMullen said Kroger is keeping an eye on customer megatrends, like health and wellness and the desire for restaurant-quality fresh and prepared foods that are also very convenient. He noted that Kroger’s culinary team recently rolled out meal kits, Prep + Pared, to pilot stores and plans to make them available at scale in the next year.

“Meal kits are one of many offerings designed to meet our customers’ changing definition of convenience,” he said. “We believe Kroger can really excel in this small but growing segment.”