During Cincinnati, Ohio based Kroger’s second-quarter results call with analysts this past week, the grocer detailed the importance of Private Brands in its overall strategy as well as the continuing negative impact of the weak economy on their results. David Dillon, Kroger chairman and CEO, said that the economy is a continuing factor in driving many consumers toward purchasing more Kroger Private Brands.
“The sluggish economy continues to strain household budgets while increasing consumer anxiety,” Dillon said. “In fact, customers tell us their expectation for the economy are more pessimistic now than at any time this year.”
Private Brands continue to grow at Kroger with a 34% penetration in grocery for the second quarter ended August 13, representing 27% of all grocery sales. “When you look at these trends compared to our first-quarter results, corporate brand dollars and total units each increased by 100 basis points,” Kroger president and COO Rodney McMullen. “Our multibillion dollar corporate brand portfolio is a competitive advantage because it gives our customers more choices and variety and value to complement the broad assortment of national brand products we offer. This is particularly important today as many shoppers continue to watch expenses and look for quality items at affordable prices.”
That means stocking that customer’s market basket with more profitable Private Brands has become increasingly important, McMullen said. “Customers are even more value conscious when they shop, are buying smaller baskets and are selecting some lower-cost items, including our low — our corporate brand products. This has made the value we offer our customers through lower every day prices, weekly promotions and personalized rewards to loyal households even more compelling.”
They also announced the expansion of its Big K Private Brand soda flavors, including apple, pineapple, passion fruit, watermelon, kiwi, blackberry, citrus and mandarin.
To learn more about Kroger’s Private Brand initiatives join me at the Private Brand Movement conference nest week Chicago, September 19 – 21 where I will moderate a conversation with Susan Sanderson, Director, Corporate Brand Management, The Kroger Company, Nancy Dumais, Director of Branding And Design – Private Brands, Delhaize America and Eli Getson, SVP, GMM, Golfsmith in a panel discussion titled: The Future Of Owned Brands Amidst Economic Revival
In the past, private label sales spiked during a recession and quickly returned to normal levels at the first sign of an upturn. This time is different, private brands are here to stay. In this session, you’ll hear from a cross-selection of industry leaders on where they see private brands headed and how they’re adapting to the new world of consumers. Hear a frank discussion on the impact of mobile, direct to consumer, social media, retailer manufacturing and the future of national brands and store brands.