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Kroger Rides Private Label To Big Quarter

June 19, 2012
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Cincinnati-based Kroger said private label share and sales grew faster than national brands in the first quarter this year, helping the retailer to post a 4.2 percent increase in same-store sales from the previous year.

In its first quarter, Kroger reported its 34thconsecutive quarter of year-over-year same-store sales growth. It said that private labels represented 26 percent of all grocery department dollar sales, while unit sales rose 60 basis points to 33.6 percent compared with last year.

“Our corporate brands team continues to create fresh and compelling products that fill unmet customer needs,” Kroger COO W. Rodney McMullen said on a conference call with analysts. “We recently launched Private Selection’s Snack Chips in 13 new flavors, including sea salt, cinnamon sugar, and a new gluten-free rice and bean chip … And by the way, they’re all very good.”

In the question-and-answer session with analysts, Kroger officials credited its Consumer 1ststrategy – which relies heavily on its private label program – and its willingness to look outside of traditional grocery competition for its growth. The company raised its full-year guidance after the strong report.

“If you go back 15 years ago, we kept thinking like a traditional grocer,” CEO David Dillon told analysts. “The difference for us has been by focusing on customers, we’re defining the industry we’re in by how the customers think of it, not how we previously thought about it.

“So as an example, we used to think about it as people who buy food in supermarkets. But today, they buy food everywhere. And in fact, if you were to list our top competitors based on market share, the markets we operate in, the top two or three would not be traditional supermarkets, aside from us.

“We were thinking about it as bigger than simply what the market was for traditional retailers. It’s almost a classic business school case study, to show how you define your market and how you think of yourself will often determine who you become. And I think that’s very true for us.”

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