Private Label Week day 5 keynote: Kroger’s customer-driven innovation
With private brands growing their share of the grocery market, a relentless focus on quality and pushing the envelope to deliver for customers is driving Kroger’s Our Brands success, according to Brad Studer, the company’s senior director of Our Brands. Studer shared insights into Kroger’s process and what drives innovation at the grocery giant in his keynote presentation on Friday, the final day of PLMA Live! Presents Private Label Week.
Using data from Boston Consulting Group’s April 2020 report on private brands, Studer noted that the industry now constitutes 18% of the U.S. grocery market — putting an imperative on retailers and suppliers to continue that growth via innovation rather than solely emulating national brands.
“The industry has shifted, and customers aren’t just looking for private brands as a knockoff of the national brand,” he said. “These customers are looking for fresh foods and for private brands to be innovators, to introduce new foods and flavors. Customers are turning to private brands for elevated premium experiences, all at an amazing value.”
Throughout Studer’s keynote, the importance of connecting with the customer for Kroger’s private brand strategy was evident, and he highlighted ways that the company looks to build authentic connections with shoppers by putting its products at the nexus of customer insights and the pull that entices shoppers to try a product, whether it is a daily essential or an indulgence.
Those insights are the result of constant deep dives into consumer preference, which most recently produced the retailer’s list of 2021 Food Trends. While several of these trends are driven by the pandemic and the amount of time people spend cooking at home, many are likely to stick around. As an example of one area of growth — restaurant-style meals and global flavors — Studer noted that the Private Selection Tikka Masala Simmer Sauce, despite being launched several years ago, has been a key driver in growing the overall category and has seen repeat sales rates more than double the category average.
Calling out the success in that category underscored Studer’s larger message about what drives Kroger’s efforts to leverage these consumer connections to drive innovation. For the Our Brands team, delivering that innovation starts with a foundational set of 4 Ps — people, perspective, performance and pride. In terms of people, one of the strengths at Our Brands, he said, is the diversity of experiences, diets and palates among the team at Kroger. In particular, it has been a boon for the plant-based Simple Truth brand, which introduced more than 50 plant-based products in 2020.
“Our work around flexitarian and vegan eating in our Simple Truth is one example of how different experiences bring about amazing products,” he said. “The flavor and product innovations we’ve delivered were born from insights and individual preferences smashed together to create customer-relevant products our customers have come to love.”
With regard to perspective, Studer said Kroger aims for each of its Our Brands to bring a unique point of view in order to help forge relationships with customers to create a growth opportunity. This is paired with a focus on performance — bringing high expectations and expertise to bear on the latest products.
“Across the entire portfolio of brands, we’re not interested in the status quo,” he said. “Our goal is to set new standards. This is why we have rigorous tasting, testing and auditing processes, because details matter.”
The company’s final P — pride — is the result of all previous elements taken together to inform every new product that the Our Brands team rolls out.
“Before we put an item on shelf for millions of households, I always ask our team a simple question: ‘Would you recommend this item to a family or friend?’” Studer said. “This simple question instills passion and purpose for our team. When you’re partnering with us on a new product, I want you to ask your team or yourself the same question.”