NRF CEO Matthew Shay greets Kroger CEO Rodney McMullen on stage during the Big Show keynote at NRF 2023 Retail. / Photo credit: National Retail Federation
For Rodney McMullen, Chairman and CEO of The Kroger Co., much of the secret to a successful grocery retail business comes down to making things simpler for customers.
In Monday’s keynote at the NRF 2023 Retail’s Big Show, McMullen discusses Kroger’s efforts to help shoppers with rising grocery prices, the growing importance of technology, and the rationale behind the Kroger-Albertsons merger deal. I spoke about the rationale in a meeting with the president of the National Retail Federation. CEO Matthew Shay.
Speaking to a crowd at the Jacob Javits Center in Manhattan, McMullen told Shay. “They engage with us in the store. We have 1-hour delivery, 30-minute delivery, or next-day delivery. They use our app to put together a shopping list. They never talked about how we talk online or in physical stores. , we’re just talking about what’s easier for them at that particular point.”
Inflationary pressures have remained high in the U.S. economy over the past 18 months, Shay said, and despite the recent subside, consumers are generally shifting from discretionary items to essentials such as food and groceries. We are shifting our spending. In that environment, Kroger “has done a great job of continuing to deliver value,” he said.
“We worry about it every day,” McMullen said of the impact inflation is having on shoppers. Their wages are not keeping up with inflation because a high percentage of their wages are spent on things in higher inflation categories. And I’ve seen over and over that they could be running an empty backhaul somewhere or they could be running an empty backhaul somewhere How do we understand how we can use data to partner with everyone and take costs out of our system so we can share it with our customers?”
Data can also help bring more value to consumers through digital coupons and deals, McMullen said.
“Since we started, I believe we have up to over a trillion downloads of coupons, well over billions a year. We curate that experience based on your household.” he explained. “What we’re projecting is something that will help expand the budget. One thing he knows right now is that some of his CPGs are going to keep up with the cost increases. am.”
Kroger’s private label is also offering consumers another way to cut costs, McMullen said, and more shoppers are finding that they love quality.
“Our brand [Kroger’s private-label portfolio] It has a large share of the market. And what we’ve found is that when customers initially switched to our brand to save money, the experience was so good that even if their budget wasn’t a little strained, We can stay together,” he said.
Shea noted that the role of technology in retail continues to expand, as evidenced by the dominance of technology exhibits on the NRF show floor. McMullen said the same trend is happening at his Kroger and across the grocery industry.
“If you look at the allocation of resources to technology, both cost and capital, it’s three to four times what it was five years ago, and we don’t see anything slowing it down,” said Kroger’s CEO. “One of the things we’re working on with the Albertsons merger is that we envision very modest synergies around technology. Reassigning to be able to do more as it impacts all of our work.
“For us, we’ve always been focused on how we use technology to make it easier for our customers to think about what they’re going to have for dinner,” he added. “And for our associates, everything you talked about, AI and machine learning, influences most of what you do. , I was writing something down physically: I can’t imagine how you’d run a company with 2,700 stores and over $140 billion in revenue. [today] If you are still trying to write something down.
Kroger and Albertson’s $24.6 billion merger agreement, announced in mid-October, is pending regulatory and other approvals and will “create significant synergies” for the combined company, McMullen says, Shay. told to
“Some of these synergies are being created because we may have two warehouses and we’re shipping goods from our warehouses here to our stores here and vice versa. , by eliminating it and significantly reducing mileage, we can save money and reduce our environmental footprint,” McMullen said. “When it comes to savings, we promised our customers $500 million to lower our prices. , we’ve been doing it for our own business, we’ve driven over $5 million in price reductions on an annual basis, and we’ve committed $1.3 billion [with the merger] It helps us to support our customers in terms of in-store renovations, experiences and more. We both have always believed that if we do the right thing for our customers, do the right thing for our employees, and support our communities, our shareholders will reap the benefits. ”
Cincinnati-based Kroger and Boise, Idaho-based Albertsons, the largest and second-largest U.S. supermarket retailers, share a common set of company values, McMullen said. added about the proposed merger.
“At the Albertsons, [CEO] Vivec [Sankaran] his team has done a great job [former chairman and CEO] Bob Miller has done an amazing job of bringing together a group of high market share companies across the country to improve the customer and employee experience. “And for us, we’ve never merged with people who don’t think their values are 100% aligned with ours.”