Kroger’s Private Brands Drive Growth as Shoppers Seek Value
Product pricing remains an important factor for Kroger shoppers, but their desire to bring home items offering quality and value is helping drive growth of the grocer’s private brand selection, interim CEO Ron Sargent said during a recent investor conference call.
Sargent said Kroger’s Our Brands products had another strong quarter in Q2, with sales growth outpacing national brands.
“Our Brands offer unique products with high quality and represent a point of differentiation for Kroger,” he said. “Simple Truth and Private Selection brands again led our growth. Looking ahead, we see Our Brands as a critical strategic asset, helping us grow sales and build loyalty with customers.”
As Kroger continues expanding its store brands, it does so under new leadership. In August, Ann Reed took on the role of group vice president of Our Brands. Her tenure with the grocer started in 1993, and she has held several leadership positions throughout the company. She filled the position vacated earlier this year when Juan De Paoli left the company.
Kroger is also positioned for further growth of its private label assortment as consumers across income levels remain sensitive to pricing. Sargent said the company is seeing overall retail food spending remaining stable, with shoppers cutting back on discretionary purchases.
“Customers are feeling pretty stressed about the economy,” he said. “They're doing things to save money. And when you look at income cohorts, low- and middle-income households are looking for deals, and they’re using coupons more. They're making smaller but more frequent trips, and they're buying more private label products.”
Sargent said consumers at higher income levels continue to spend, although they also remain concerned about the economy and food prices.
“They're splurging on some of the premium products,” he said. “When you look at the growth in Our Brands, Private Selection and Simple Truth, premium products are leading the way. (Consumers) are also buying larger pack sizes. And looking ahead, I think the consumer is going to remain cautious.”
Beyond private label, Kroger continues to opportunistically lower prices, and since the start of 2025, has cut prices on more than 3,500 incremental products and is working to make promotions simpler.
“We are making it easier for non-digital customers to take advantage of the value Kroger offers by reintroducing paper coupons in every store,” Sargent said. “Our customers are recognizing these changes, and they're giving us credit for them. We know this because customer price perception improved in nearly every division this quarter, and we saw another quarter of sequential improvement in share.”
The grocer also continues with its CEO search, but Sargent said there is no update as of the Sept. 11 conference call.
“It’s a unique company and the scale is large,” he said. “And that's why I think that (the search committee) is being very careful and very cautious. But I remain confident they're going to find an outstanding leader for Kroger.”
For the quarter ending Aug. 16, total company sales were $33.9 billion, on par with second-quarter sales from the previous year. The 2024 results included $718 million from Kroger Specialty Pharmacy sales, which was sold by the grocer in 2024. When excluding fuel and Kroger Specialty Pharmacy, sales increased 3.8% over the comparable quarter of the previous year. Identical sales excluding fuel increased 3.4%.
