Kroger to open 110 stores; unveils three updated formats
The Kroger Co. is launching a major growth initiative that includes new builds and new store formats.
The supermarket giant will introduce three updated store formats, with plans to build 110 stores in fast-growing markets by 2029, executives told investors at the company’s Investor Update in New York City.
The new formats are part of Kroger’s $5 billion investment in its stores, operations and e-commerce/media as it looks to hit approximately 3% comparable sales growth (excluding fuel and pharmacy, and the pending acquisition of Giant Eagle) in 2029.
The company is also targeting 7% to 11% compound annual growth in adjusted net earnings per share through 2029, compared to its earlier target of 8% to 11% growth.
Kroger’s refreshed formats include a 99,999-sq.-ft., “full-scale” store built for high-volume, high-opportunity markets, and a 75,000-sq.-ft. “core” flexible format for a broad range of markets. The third format is a 50,000-sq.-ft. “focused” store, with the smaller size allowing Kroger to expand in markets better suited to a smaller footprint.
The three formats are similar in that they will be built for omnichannel fulfillment, offer more meal solutions and have food at their core while allocating less space to slower-growing categories such as apparel and general merchandise. Each format will feature upgraded backroom space to support pickup and delivery services.
Mary Ellen Adcock, Kroger’s executive VP and chief merchant and marketing officer, said that the new formats are designed to accelerate growth in the company’s strongest-performing businesses: fresh foods, meal solutions and private label products. (Kroger is introducing more than 100 meals over the next year.)
“The size may vary, but the customer promise is the same, a food-first experience, built on data-driven items, convenience however customers choose to shop with us," she said.
David Kennerley, CFO of Kroger, said the company expects the new stores to be the biggest driver of the company’s sales increase, generating approximately $7 billion in annualized incremental sales at maturity over the three-year period.
Building more stores and refreshing its format are one of four priorities Kroger has set to drive its comparable store growth. The other three include elevating merchandising and growing its brand penetration to 40%, strengthening its loyalty program and “making value more visible.”
[READ MORE: Kroger to reportedly cut 3,000 corporate jobs]
The company also plans to expand its use of digital shelf labels. Currently, more than 1,000 stores have the technology in place, and the company plans to expand the technology to more than 2,400 locations by 2029.
Kroger Co. operates approximately 2,700 stores across 35 states under a variety of banners that include Kroger, Fred Meyer, Ralphs, Harris Teeter, Pick 'n Save, Dillons, King Soopers and and others.
