How Kroger Grocery is Building a Killer Specialty Food Empire

Old-time Kroger Company is innovating in specialty and natural foods

Kroger Company grocery stores feature artisan cheese with Murray's
Murray's Cheese reaches thousands of supermarket shoppers at Kroger supermarkets. Susie Wyshak

Just how big and how successful 100+ year old Kroger Company is these days? They sell around $25 billion of food, goods, gas and jewelry per quarter

Kroger is an incredibly diversified company, and that strategy is working for them.

The company runs approximately 2,623 grocery stores in 34 states under nearly two dozen different store brands as well as nearly 800 convenience stores under 6 brands in 19 states.

 

Given the trend in consumers (especially Millennials) seeking convenience, Kroger's diverse retail strategy is right on.

Kroger is also heavily focused on mobile commerce, with frequent updates to their innovative apps. For example, they are working smartphone-tech to take the pain out of supermarket shopping: an app that alerts you if the foods on your list are nearby.

3 Keys to Winning Specialty Foods Shoppers

Kroger has found success with several interesting initiatives targeting adventurous eaters and millennials:

1. Murray's Cheese Stores Within Kroger Supermarkets

Girl and the Fig jam? Effie's Homemade oatcakes? Was I in a Ralph's Supermarket?

Yes—and this display of incredible international specialty foods was just part of the Murray's Cheese  display just inside a large Ralph's grocery store in Los Angeles.

Murray's Cheese is a really big deal in the cheese world. This New York-based cheese shop, founded in 1940, formed an exclusive partnership with Kroger which has about 210 Murray's counters in supermarkets around the U.S. 

Kroger becomes a go-to for artisan cheese and exotic foods. The partnership brought Kroger shoppers more than 175 cheeses and specialty goods from all over the world. 

Kroger also became a fun and interesting place to work: associates staffing the Murray's cheese counters are trained by the Murray's experts in New York.

Around 52 employees have achieved "Certified Cheese Professional" status with the American Cheese Society (ACS) with many also passing a rigorous cheese expertise exam.

What was once a trip to the old supermarket is (nearly) as rewarding as visiting a New York cheese shop.

2. Conventional and Organic Private Label Lines

According to Yahoo!, Kroger has reached $1 billion in sales of its organic Simple Truth products merely two years after launching. While some headlines focus on the possibility of Kroger dethroning Whole Foods in organics, what's more interesting is Kroger versus Costco, which is reported to be the new leader in organic foods AND the #2 retailer in the United States!

Mike Ellis, president and chief operating officer of Kroger was quoted as saying: “Simple Truth has been our most successful brand launch ever, reaching billion-dollar brand status in less than two short years." The mission of Kroger Company — owner of Ralphs,  — includes a goal to be a leader in food distribution and merchandising.

Kroger's multi-channel business is a natural for growth: The company is testing its Simple Truth and Simple Truth Organics line in its 782 convenience stores (called c-stores, in industry speak).

Who doesn't want more healthful, convenient food options on the go or in food deserts lacking a full-service supermarket? Expect to see more of the Simple Truth lines in Kroger's c-stores such as Kwik Shop and Quik Stop Markets.

3. Private Selection Upscale Private Label Line 

Several years ago, Kroger joined the many grocery stores developing a specialty food house brand, with their Private Selection™ product line.

Kroger describes this private label food line as emphasizing "fresh, authentic ingredients...in gourmet and artisan items continually change as food trends evolve."

Unlike the colorful Whole Foods 365 Everyday Value private label and downright eclectic Trader Joe's brands, Private Selection has a classic "gourmet" elegance, with black, brown and gold branding with a formal typeface.

 

This is just one of several private label lines that Kroger developed. Their goal is to make buying house brands as acceptable as well-known name brands. Kroger has several of its own food manufacturing facilities, which helps the company stay nimble and respond to trends. 

World's Collide: Kroger Products From Costco Delivered by Instacart

A great illustration of how collaborative and yet unexpected the food industry can be is this example of Costco stocking a balsamic vinegar from Kroger, which Instacart can deliver to shopper homes.

It just goes to show how important it is to keep close ties with competitive and complementary food businesses. You never know when they may become a distribution or manufacturing partner!

Disclosure: After researching this article, I was so impressed that I bought Kroger stock. This doesn't mean that I'll stop shopping at Costco, TJ's and Whole Foods, yet again illustrating how complex the food industry and consumer habits can be.