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Grocery Roundup: Kroger’s Digital Sales Hold Strong As Shopper Behavior Normalizes

Grocery Roundup: Kroger’s Digital Sales Hold Strong As Shopper Behavior Normalizes

June 17, 2021 at 05:23PM
by PYMNTS

The Kroger Co.’s digital channels just keep growing. The company reported Thursday (June 17) that, for the quarter ending May 22, 2021, it saw digital sales grow 16 percent over Q1 2020, a quarter in which digital sales already grew 92 percent, marking 108 percent growth on a two-year stack.

Chairman and CEO Rodney McMullen told analysts on a call that this quarter’s performance begins to give a sense of what the company’s post-COVID performance will look like. As he put it, “This is the first quarter where we saw significant signs of recovery, and the beginning of a return to what we are hopeful will be a new normal … Importantly, we saw a continuation of several pandemic trends. This includes heightened digital engagement across demographics, expanded consumption in key fresh areas … and trading up to more premium products.”

In the quarter, the company continued to make investments in its digital channels, which included pilot testing drone deliveries and opening a customer fulfillment center (CFC), powered by technology from global grocery eCommerce company Ocado Group, that uses artificial intelligence (AI) and advanced robotics to automate fulfillment.

The company’s SVP and CFO Gary Millerchip added that, in the quarter, Kroger reduced average digital order time by 5 percent and grew media revenue per digital basket by 33 percent. Additionally, the company continues to improve its personalization capabilities. In the quarter, the company made over 258 billion personalized recommendations, according to McMullen.

Overall, identical sales without fuel fell about 4 percent year over year, compared to the early pandemic stockpiling sales spike, and grew about 15 percent compared to 2019.

Stater Bros. Markets Grows eComm Capabilities With Mercatus Partnership

As Kroger reports the success of its digital investments, Southern California supermarket chain Stater Bros. Markets is revealing new digital investments of its own. Toronto-based software as a service (SaaS) company Mercatus, which creates end-to-end eCommerce solutions for grocery retailers, announced Wednesday (June 16) that the supermarket company will be moving its online order fulfillment capabilities onto the Mercatus platform.

“Now more than ever, our customers are looking for the convenience of shopping online,” Pete Van Helden, CEO of Stater Bros. Markets, said in a statement. “We see this as an opportunity to build stronger relationships with our shoppers through an eCommerce journey that truly embodies our brand’s promise of excellence in food and service.”

The Stater Bros. Markets-branded platform will feature a “fully integrated online ordering and fulfillment experience,” offering digital ordering for curbside pickup and for delivery. Internally, the partnership will give the supermarket company access to Mercatus in-store fulfillment tools to make the process more efficient, as well as to Mercatus turnkey digital advertising tools.

“We look forward to working closely with the team at Stater Bros. to roll out a differentiated online shopping offering that will give the grocer the ability to strengthen connections to its customers and improve contribution margin in the process,” said Mercatus President and CEO Sylvain Perrier.

NGA: Independents Account for One-Third of All Grocery Sales

Independent grocers are holding their own. National Grocers Association (NGA), the trade association representing independent supermarkets, announced the results of its economic impact study on Tuesday (June 15). Turns out, independents’ share of total grocery sales has actually grown 25 percent in the past decade, now accounting for 33 percent of all sales.

“Through strategic investment and planning, independent community grocers found themselves well positioned to meet the intense demand placed on them by consumers during the pandemic,” NGA President and CEO Greg Ferrara said in a statement, “and have proved themselves to be indispensable partners in their communities and local economies.”

The report also notes that independents contribute $255 billion to the U.S. economy and that their sales have nearly doubled since 2012, outpacing overall grocery growth. However, the study found that independents are slipping in rural areas and in low-income areas within cities.

“NGA is working to reverse this trend through a comprehensive antitrust advocacy approach that would rein in growing power-buyer influence and encourage grocery investment in disadvantaged communities,” said Ferrara.

JBS Pours $130 Million Into Rebuilding Beef Supply Chain

Visits to the grocery store may be more predictable than they were in, say, March 2020. Most of us are not stockpiling dry goods these days, and the canned food aisle generally is not going to be stripped bare. Still, the food supply chain is struggling.

In addition to spending $11 million in ransom to the cyberattackers who hacked its system, JBS, the world’s largest meat processing company, also announced last week that its USA branch is investing over $130 million to support its production capabilities, increasing capacity at two of its facilities. The announcement comes after headlines predicting that the attack against JBS would lead to major shortages.

“Our longstanding commitment to the U.S. beef industry and continued reinvestment in its success will help ensure that beef remains at the center of plates around the world for years to come,” Tim Schellpeper, president of the JBS USA Fed Beef business unit, said in a statement.

The news comes amid a massive push from the presidential administration to tackle the issue. The Biden administration announced last week (June 8) that the United States Department of Agriculture (USDA) will invest over $4 billion to strengthen the food supply chain, creating a Supply Chain Disruptions Task Force to address the problem.