The Kroger Co.’s efforts to deliver a seamless shopping experience appear to be paying off as the nation’s largest traditional grocer reported a strong third quarter for its 2017 fiscal year.
Total sales increased 4.5 percent to $27.7 billion for the quarter ending Nov. 4 compared to $26.6 billion for the same period last year.
Same-store sales rose 1.1 percent, while net earnings were $397 million. Comps were driven by strong performance in fresh departments, according to CFO Mike Schlotman. “The results in produce and meat were terrific, and we continue to see double-digit growth in natural foods,” Schlotman said.
Meanwhile, digital revenue rose 109 percent, driven by the continued rollout of Kroger’s ClickList online shopping service.
Restock Kroger, the Cincinnati-based retailer’s new corporate strategy rolled out in October, “is off to a great start,” said Rodney McMullen, Kroger’s chairman and CEO. “Customers are recognizing our efforts to redefine the customer experience and rewarding us with their loyalty. We continue to accelerate our digital and ecommerce offerings, to grow Our Brands, to lower prices for customers, and to invest in our associates.”
Kroger is continuing its rapid expansion of ClickList, expected to be offered at more than 1,000 locations by year’s end.
“We also know that some customers desire home delivery. We’ve gone from zero to more than 300 locations offering home delivery in the span of a little over a year by partnering with service providers including Shipt, Roadie, Uber and others,” McMullen said. “We’ll continue to build up our home delivery offering in 2018 with these partners as well as Instacart – who we are developing a unique relationship with. We have initially launched a partnership with them in Southern California. We’ll continue to use our data and customer insights to make it really easy for our customers to navigate across the channels they choose when shopping with us, and we’ll continue leveraging our physical proximity to our customers as a competitive differentiator.”
McMullen said Kroger’s transition to seamless is working. “Households that engage in our seamless offerings – engaging digitally and with our physical stores – spend more per week than households that do not,” he said. “The future looks even more promising. We’ll continue to add even more services, expand our available product selection, and more effectively use our insights to create a personalized experience that every customer will love.”
Additionally in Q3, Kroger launched its We Are Local campaign, including a new digital hub to welcome local and emerging brands to partner with the company; hosted its first natural foods innovation summit to expand its natural foods offering; launched a new restaurant concept, Kitchen 1883; and announced two new Our Brands product lines: an apparel brand to launch in 2018, and a floral line, Bloom Haus, now available in stores.
McMullen indicated that Kroger’s fourth quarter is shaping up well, with comps expected to mirror those in Q3.
“The holidays are always Kroger’s time to shine. In fact, we had our best-ever Black Friday results for general merchandise, led by record sales at Fred Meyer,’ McMullen said. “Everything we are doing revolves around our associates providing friendly service and fresh products to our customers.”
Other ongoing initiatives include continued price reductions through cost savings; personalized communication to customers through a variety of digital and other media channels; $500 million in talent investment over the next three years; and progress toward eliminating waste by 2025.
The Kroger Co. operates 2,790 retail food stores under a variety of local banner names in 35 states and the District of Columbia.