Retailer Spotlight: Brand Building at Kroger
So, what’s next for Kroger’s Our Brands assortment of private label products?
If you ask Juan De Paoli, the grocer’s vice president of Our Brands, he’ll tell you, “a lot.” Overseeing a $30 billion business for Kroger, De Paoli saw sales of the company’s private label products blossom in 2022. Driven by increased consumer demand and an aggressive assortment expansion, the in-store and digital shelves at Kroger will see a host of new items once again throughout 2023.
Beyond the effort to bring new products to its shoppers, the grocer is also focused on changing the consumer mindset related to its private brands. A new TV marketing campaign that placed ads during highly watched professional and college football games in January were designed to drive home the message that Kroger’s Our Brands are not just “me-too” products, but in fact national brands that offer quality items at a value. This branding strategy will continue throughout 2023.
Recently, Store Brands spoke with De Paoli about the recent successes Kroger has enjoyed with its Our Brands assortment and what’s next for the grocery giant.
STORE BRANDS: Kroger has cited its assortment of private branded products as a key to its overall sales growth throughout 2022. What were some factors behind the growth and success?
JUAN DE PAOLI: There are a number of factors that led to our success with the Our Brands assortment. Fundamentally, Kroger is built on offering products that are quality and provide value. As we continue to expand the Our Brands assortment, we are focused on continuing to offer products that provide quality and value.
SB: When you look back at 2022, what were some of the products that proved to be resounding successes?
JDP: We launched 680 products last year, and with many exceeding expectations, it’s hard to pick one or two. One of the highlights was our new line of Big K Zero Sugar Cola, which we offered in 12-packs. Our line of artisan breads did really well, as did our Peanut Butter Dippers. These offered consumers packages of wafers filled with peanut butter that could be dipped in various flavors of marmalade. It’s a great snack that is high in protein.
SB: How has the product development process for private brand products evolved over the years?
JDP: I’m very fortunate to be part of an amazing organization with Kroger that has a product development process that is focused on building a portfolio of (store) brands that seeks to embellish the idea of having products that are national brand equivalent or better. That thought process is seen in our Simple Truth brand, which accounts for $3 billion in sales, to our Private Selection line that offers our customers a premium culinary experience. We are also focused today on not just developing new products, but building brands.
SB: What type of feedback or suggestions do you receive from shoppers?
JDP: Our customers give us a great deal of feedback about the quality and value of products. In some cases, they give us ideas for new products and we take those and run with them. In other cases, the feedback we receive allows us to make incremental improvements to our products. We have a thorough validation process all of our products go through. They are tasted and tested by our customers.
SB: There are approximately 20 retail brands under the Kroger umbrella. Are there noticeable differences in the types of private brand products shoppers purchase at each?
JDP: In addition to the 20 Kroger divisions we have across the country, we also have e-commerce pure play operations in other parts of the country, such as Florida. The customers in our new markets where we have online only operations are welcoming Our Brands more than we expected. That is very encouraging. In general, we meet the needs of our customers through extensive research. We have some 15,000 (private brand) items as part of our selection and have more launching every year. So there is something for everyone.
SB: Within its private label assortment, has Kroger expanded existing categories or moved into new categories to meet consumer demand?
JDP: We are always looking for new areas where we can expand. For example, we have expanded Simple Truth to include plant-based products and are expanding our selection of upcycled products. We also continue to watch trends and changes in consumer behavior.
SB: What steps has Kroger taken to further highlight its private label assortment and communicate the savings consumers are able to realize by purchasing private label products?
JDP: We are building a brand and treating it as a brand. A great example is the new Kroger television commercials featuring our Krojis (Kroger emojis) with the message that consumers are winning with products that offer high quality and value. We initially featured two core products, peanut butter and ice cream, during recent promotions that aired during the professional and college football playoffs. And there is more to come this year.
SB: There has been discussion by retailers of the need to raise the profile of their private brands on their websites and apps. Is this something that Kroger has done or is looking to do?
JDP: As we continue to build our presence in markets where we have a heavy digital presence, we are ensuring that our brands are well represented. We have all the assets in place to communicate to our customers.
SB: Is there a ceiling for Kroger with how far it can go with its private brand assortment, or is the sky the limit?
JDP: One could argue that the sky’s the limit. We continue to use data to drive our understanding of the consumer and how we can serve them best. We remain committed to being full, fresh and friendly. And when you look at the impact private brands have within international markets, you could certainly argue that the sky’s the limit.