Running head: THE KROGER COMPANY 1

The Kroger Company

Name
Institution
Date
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Introduction
The Kroger Company is an American retail firm that was founded in 1883 by Bernard
Kroger in Ohio (Pratap, 2020). Research suggests that this is the largest supermarket in the
United States in terms of revenue which currently stands at $121.16 billion as of 2019 (Fortune,
2020). However, the firm is the second-largest general retailer after Walmart. The firm is also
ranked fifth largest globally and fourth-largest American private employer all over the United
States. According to a report on August 2020, Kroger is said to operate through subsidiaries or
directly and has more than 2700 multi-department stores and supermarkets. The firm’s
headquarters are situated in downtown Cincinnati. Kroger has been able to maintain markets in
the District of Columbia and 35 states in the United States (The Kroger Co, 2020). The store
formats adopted include departmental stores, superstores, supermarkets, jewellery stores, and
hypermarkets (Fortune, 2020). A majority of their convenience stores were sold in 2018 to EG
Group.
Additionally, branded stores for the company are situated in Southern and Midwestern
United States. The firm operates 35 manufacturing or food processing facilities, 2258
pharmacies, 1575 supermarket fuel centres, and 222 in-store medical clinics (The Kroger Co,
2020). Employees within the firm have unionized collective bargaining agreements whereby a
majority of them are represented by the United Food and Commercial Workers Union. The top
three direct competitors of the firm include Walmart, Target, and Costco.
Retail Strategy
The retail industry typically encompasses businesses such as retail stores, supermarkets,
departmental stores, online merchants, and speciality stores, among others (The Kroger Co,
2020). The practice of retail is mainly the buying of large amounts of stock from producers or
wholesalers at a lower price, breaking bulk, and reselling the products in smaller amounts (The
Kroger Co, 2020). Therefore, the retail industry is considered to be one of the most ubiquitous
markets and often acts as a solution to most of the human essentials, such as clothing and food.
Kroger has a large selection of organic goods as well as a wide selection of several private labels
(Lutz, 2015). Not only are the prices, services, and products offered by the firm great, but also
the whole company is regarded and treated as one of the most comfortable places where people
can shop at their convenience (Pratap, 2020). We can see the praises of the company all over the
internet. Similar to other retailers in the United States, the target group for the firm is mainly
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individuals between 18-44 years. The middle-class and upper-middle-class are the primary
customers of Kroger.
Kroger’s Retail Mix
Product
The retail operations undertaken by Kroger make up about 97% of the firm’s sales.
Kroger’s primary business revolves around its food stores which produce more than 94% of the
firm’s revenues (Pratap, 2020). All the rest of net sales obtained by Kroger are derived from the
manufacturing facilities and jewellery stores. Other than supermarkets, the firm is also involved
in digital selling, departmental stores, and price impact warehouse stores (Pratap, 2020). The
multi-department stores established by the company are similar to supercenters but often offer a
wider variety of general merchandise and national brand apparel.
The firm also sells several private label products under the Own Brands segment (Acosta,
2019). Through the firm's Our Brands portfolio, the firm can demonstrate its passion for
delivering good quality and healthy foods to its customers (Lutz, 2015). Through the Our Brands
segment, the firm is differentiated from other firms (Acosta, 2019). Therefore, Kroger competes
with both private label food brands as well as other leading national brands. 2019 was a great
year for Kroger since the Our Brands segment was able to exceed total sales of $23.1 billion
(Pratap, 2020). The firm also added new 758 items in the same segment.
Place
Kroger has operations in about 2800 grocery stores, 35 food plants and 44 distribution
centres. The company’s headquarters are located in Cincinnati, Ohio, United States (Pratap,
2020). For sales, the firm uses both offline and online channels. As earlier mentioned, the stores
are operated either through subsidiaries or directly all over the United States (The Kroger Co,
2020). In a 2020 report, the firm operated 2,757 stores using several local banners whereby 2257
included pharmacies while 1567 stores had store fuel centres. Other than pickup and online
ordering, Kroger offers home delivery services in about 97% of Kroger households (Pratap,
2020). About 54% of its stores are operated within company-owned facilities hence saving on
costs while enhancing self-development.
As earlier mentioned, the firm’s stores operate under a variety of banners which enjoy
strong social support (Friesner, 2014). Supermarkets operate under one of the four established
formats (The Kroger Co, 2020). These include multi-departmental stores, price impact
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warehouses, market place stores, or a combination of food and drug stores. The main food store
format adopted by Kroger is the Combo store. The stores can draw customers from a 2 to 2.5 km
radius (Pratap, 2020). These stores are very successful, especially because customers can find a
variety of products under one roof. The sufficient large size is also able to draw customers in
large numbers. The multi-departmental stores are also larger compared to Combo stores.

(Pratap, 2020)
Price
The firm’s pricing strategy is primarily focused on winning a significant market share
within the retail industry (Pratap, 2020). Therefore, the firm has continued to focus on the
achievement of a wider customer base by introducing a penetrative pricing strategy (Lutz, 2015).
Other than selling a wide range of products, especially in the grocery segment, the firm also
focuses on attracting customers by pricing products much lower than competitors (Friesner,
2014). Kroger runs a unique format of stores that is mainly focused on low pricing (Pratap,
2020). These stores are regarded as price-impact warehouse stores. The stores offer a “no-frills
low-cost warehouse format". They offer lowered prices daily and promotions in groceries,
health, and beauty items.
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Kroger is committed to deepening its pricing focus so that it can gain a considerable
share within the market (Pratap, 2020). For the past couple of years, Kroger has been gaining a
wider customer base and increased market share. This is attributable to the strategic pricing
strategy adopted by Kroger. Since a lot of competition faces the retail industry, pricing renders to
be one of the primary sources of competitive advantage (Lutz, 2015). Walmart is the leading
market player in the retail industry. Therefore, to remain competitive, Kroger focuses more on
pricing to grow a market share and popularity.
Promotion
The level of competition within the retail industry in the US is considerably high.
Therefore, to overcome the pressure, retail firms also need to focus on promotion and advertising
other than the quality of products, product range, and customer experience (Pratap, 2020).
Promotions and advertising help companies to grow their customer base and gain a significant
market share. Therefore, retail brands such as Kroger have increased their level of investment in
technology (Friesner, 2014). Through this, Kroger can offer omnichannel shopping experience to
their customers. Trends in digital marketing within the retail industry are also continually
growing since retailers are making use of social media, paid digital promotions, and email
marketing in customer engagement and promotions (Pratap, 2020). The level of investment in
the advertisement within the Kroger Company has significantly grown to increase sales and
demand. The advertising expenses in 2019 rose from $752 million to $854 million in 2018.
Additionally, the firm is also committed to establishing customer loyalty. This is being
made possible by the continued strategic investment in several loyalty programs which grow
customer engagement and drive increased customer loyalty (Pratap, 2020). The competitive moat
of the firm is also driven by a program referred to as ‘Fresh’. Through this program, the firm
offers tasty and fresh foods to its customers all over the United States. In 2019, the firm
introduced a brand transformation campaign named “Fresh for Everyone” (Pratap, 2020). The
campaign was well received and has proven to be effective in marketing.
Additionally, Kroger offers discounts, coupons, and rewards to customers intending to
attain customer loyalty and grow the sales margins (Friesner, 2014). The firm is also growing in
its influence on customer experience. By using data personalization, the firm can offer enhanced
customer experience. Generally, this also serves as a source of competitive advantage for the
firm.
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People
Being a retail brand, Kroger heavily focuses on the strategic management of its human capital.
Through this, employees are fully motivated and able to deliver great services (Pratap, 2020).
The human capital renders to be a leading source of competitive advantage since Kroger has
established a safe work environment and strong work culture (Friesner, 2014). Additionally, the
compensation philosophy adopted in the firm is also focused on the attraction and retention of
the best talents. Therefore, employees are highly motivated to achieve the set organizational
goals. The established incentive plans are designed to reward the actions of employees hence
leading to the creation of value both in the short and long term.
Processes
Kroger is focused on the customer experience. Therefore, all business processes are
designed in a manner that creates the highest value for both customers and other stakeholders
(Pratap, 2020). The firm uses technology in making business processes more effective and
efficient. The omnichannel experience, pickup, and delivery services streamline operations
within the firm. Technologies which enhance customer convenience in terms of personalization
have also been adopted (Pratap, 2020). Typically, Kroger offers customers with the best-in-class
shopping experience.
Physical Evidence
Apart from the physical infrastructure, there is more to be regarded as physical evidence.
Kroger’s merchandise with a logo and stores provide physical evidence that the firm is still in
operation(Pratap, 2020). Additionally, the distribution chain established by the company all over
the United States is also regarded as physical evidence. The firm fulfils all the requirements of
being a legal retailer in the United States.
Competitors
Walmart
Walmart is a multinational retail firm which specializes in grocery stores, supermarkets,
hypermarkets, and departmental stores. Mostly, Walmart operates hypermarkets which are
usually gigantic. In a 2019 report, the firm generated more than US$515 Billion in revenue and
was considered the highest-earning firm globally. The firm also has about 2.2 million employees.
Therefore, the firm poses to be a very big challenge for Kroger.
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Walmart has been able to perfect its pricing by offering customer-friendly prices,
excellent procurement strategies which encourage bargaining, and varying purchase options such
as the ability to pay in instalments or cash (Corporate Finance Institute, 2020). In terms of
products, the firm offers a wide variety of products, maintains strong relationships with
suppliers, and offers white labelled products which attract customers. In promotion, the firm
offers discounts during all seasons, provides secure shipping, and uses diversified methods of
advertising to attract customers (Corporate Finance Institute, 2020). Therefore, the firm remains
relevant within the market despite the emergence of new competitors.
In consideration of place and geographical location, the firm has great placements,
especially in the United States (Corporate Finance Institute, 2020). This means that the stores are
strategically located hence being highly convenient. The firm also has a fleet of delivery trucks
that offer home deliveries, branding and differentiation, well-organized distribution centres, and
an efficient eCommerce platform that enables customers to purchase products without
necessarily physically visiting stores (Corporate Finance Institute, 2020). Similar to other
retailers, the target group ranges from 18-44-year-olds. All of these act as competitive
advantages that help the firm to remain highly relevant in the retail industry.
Costco
Costco is also an American multinational corporation that was founded in 1976 by Robert
and Sol Price. The firm was initially known as Price Club Warehouse. However, six years later,
the firm was renamed to Costco. The American giant is estimated to have about 800 warehouses
globally. In 2019, the firm generated revenue of US$152 billion and had 250,000 employees.
The firm also targets a market of individuals between 18-44 years. Costo’s trademark is that it
initiated the idea of establishing a retail store within a warehouse. Therefore, this is a sustainable
competitive advantage for the firm. It is also considered to be the second-highest revenue-
generating company globally. One special feature in Costco is that customers are required to
have a membership card that allows them to buy cheap products even within competing firms.
However, in cases where a customer is not buying products occasionally, the membership fee
renders to be very expensive. Kroger can beat Costco in this aspect, being that it does not require
customers to have a membership card or pay membership fees. The products offered by Kroger
are much affordable compared to those in Costco.
Target
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Target is also an American retail corporation and eighth-largest retailer in the United
States. The firm was founded by George Dayon in 1902 and was initially known as Goodfellow
Dry Goods. Target has more than 1800 stores all over America and 360,000 employees. In 2019,
the firm generated more than US$75 billion in revenue, holding 39th position in the Fortune 500
list. Target operates in over 200 countries all over the world and has more than 11,000 stores
globally. The firm has a reputation for being highly widespread globally. However, this
reputation is beaten by Kroger's nature of offering products which attract more people due to
health consciousness (Lutz, 2015).
Target can appeal to a wide range of customers, such as kids, women, teens, and families.
Typically, customers targeted by the firm are mainly moderate-to-better income families who are
active and well educated (PYMNTS, 2016). The median target age is 40 years. The ability of
Target to provide a variety of products for a diverse target group acts as its sustainable
competitive advantage.
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References
Acosta, G. (2019). Kroger’s new differentiation strategy. Retrieved from
https://storebrands.com/krogers-new-differentiation-strategy
Corporate Finance Institute. (2020, July 27). Walmart marketing mix - Understand Walmart's
marketing strategy. Retrieved from
https://corporatefinanceinstitute.com/resources/knowledge/other/walmart-marketing-
mix/
Fortune. (2020, August 8). Kroger | 2020 fortune 500. Retrieved from
https://fortune.com/company/kroger/fortune500/
Friesner. (2014). Kroger marketing mix. Retrieved from
https://www.marketingteacher.com/kroger-marketing-mix/
The Kroger Co. (2020, October 26). Retrieved from https://www.thekrogerco.com/
Lutz, A. (2015, March 5). A grocery chain no one talks about is becoming Whole Foods' biggest
threat. Retrieved from https://www.businessinsider.com/krogers-strategy-to-take-over-
grocery-stores-2015-3?IR=T
Pratap, A. (2020, June 19). The Kroger Company marketing mix. Retrieved from
https://notesmatic.com/2020/06/the-kroger-company-marketing-mix/
PYMNTS. (2016, November 3). Average target shopper & customer demographics. Retrieved
from https://www.pymnts.com/news/retail/2016/average-target-shopper-customer-
demographics/