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Kroger's Restock Strategy, Digital Efforts to Aid Top Line
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The grocery industry has been undergoing a fundamental change, with technology playing a major role and the focus shifting to online shopping. This transition in shopping pattern is compelling supermarket chains to rapidly adapt to changes in the ecosystem. These companies are left with no option but to keep pace with the changing retail scenario and focus more on enhancing omni-channel capabilities. It seems that The Kroger Co. (KR - Free Report) has taken the stock of the situation and is on its way to give itself a complete makeover.
Kroger has been trying all means to overcome competition, which has intensified with the foray of Amazon (AMZN - Free Report) . The company is expanding store base, introducing new items, digital coupons, and order online, pick up in store initiative. The company’s “Restock Kroger” program is also gaining traction. These endeavors are likely to fuel top-line growth. Analysts polled by Zacks expect fourth-quarter and fiscal 2017 revenues to come in at $30.84 billion and $122.13 billion, reflecting an increase of roughly 11.7% and 6%, respectively.
Kroger’s Strategy to Counter Competition
The company’s “Restock Kroger” program is gaining traction. Kroger commenced “We Are Local” campaign; launched and opened a new restaurant concept, Kitchen 1883; and added two new product lines under “Our Brands” — an apparel brand and a floral line, BLOOM HAUS. As part of the program, management is considering the sale of convenience store business, and expects to generate $400 million in incremental operating margin by 2020 and over $4 billion of free cash flow in the next three years. The company in collaboration with Chase Pay is offering mobile payments in select markets.
Kroger is looking to expand its “Scan, Bag, Pay & Go and Self-CheckOut” program — piloted at 20 stores — to nearly 400 locations in 2018. Further, Ralphs — a unit of grocery giant — in partnership with Instacart is offering home delivery at select locations in Southern California. Kroger remains optimistic about the acquisitions of Vitacost.com, an online retailer of vitamins and health-oriented products; Harris Teeter, a grocery chain, and the merger of Modern HC Holdings with Axium Pharmacy Holdings Inc., a specialty pharmacy. Kroger also acquired Roundy's, the grocery store operator.
Kroger’s Customer 1st strategy that enriches the consumers shopping experience and convinces them of returning to the store is also benefiting the company. We believe that the company's operational strategies present enormous opportunities to augment identical supermarket sales, alleviate gross margin pressure, improve operating margin and enhance return on invested capital.
Per sources, Kroger is possibly mulling over purchasing America’s major online wholesaler — Boxed. The speculation is also rife about this Cincinnati-based company to acquire Overstock, an online retailer that offers home decor products and others.
Wrapping Up
Kroger, which shares space with Wal-Mart (WMT - Free Report) and Target (TGT - Free Report) , is leaving no stone unturned to attract consumers and attain incremental revenues. We believe that these strategies are likely to bolster performance and drive the stock further. In the past three months, shares of this Zacks Rank #3 (Hold) have surged 38%, outperforming the industry’s growth of 20.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Kroger's Restock Strategy, Digital Efforts to Aid Top Line
The grocery industry has been undergoing a fundamental change, with technology playing a major role and the focus shifting to online shopping. This transition in shopping pattern is compelling supermarket chains to rapidly adapt to changes in the ecosystem. These companies are left with no option but to keep pace with the changing retail scenario and focus more on enhancing omni-channel capabilities. It seems that The Kroger Co. (KR - Free Report) has taken the stock of the situation and is on its way to give itself a complete makeover.
Kroger has been trying all means to overcome competition, which has intensified with the foray of Amazon (AMZN - Free Report) . The company is expanding store base, introducing new items, digital coupons, and order online, pick up in store initiative. The company’s “Restock Kroger” program is also gaining traction. These endeavors are likely to fuel top-line growth. Analysts polled by Zacks expect fourth-quarter and fiscal 2017 revenues to come in at $30.84 billion and $122.13 billion, reflecting an increase of roughly 11.7% and 6%, respectively.
Kroger’s Strategy to Counter Competition
The company’s “Restock Kroger” program is gaining traction. Kroger commenced “We Are Local” campaign; launched and opened a new restaurant concept, Kitchen 1883; and added two new product lines under “Our Brands” — an apparel brand and a floral line, BLOOM HAUS. As part of the program, management is considering the sale of convenience store business, and expects to generate $400 million in incremental operating margin by 2020 and over $4 billion of free cash flow in the next three years. The company in collaboration with Chase Pay is offering mobile payments in select markets.
Kroger is looking to expand its “Scan, Bag, Pay & Go and Self-CheckOut” program — piloted at 20 stores — to nearly 400 locations in 2018. Further, Ralphs — a unit of grocery giant — in partnership with Instacart is offering home delivery at select locations in Southern California. Kroger remains optimistic about the acquisitions of Vitacost.com, an online retailer of vitamins and health-oriented products; Harris Teeter, a grocery chain, and the merger of Modern HC Holdings with Axium Pharmacy Holdings Inc., a specialty pharmacy. Kroger also acquired Roundy's, the grocery store operator.
Kroger’s Customer 1st strategy that enriches the consumers shopping experience and convinces them of returning to the store is also benefiting the company. We believe that the company's operational strategies present enormous opportunities to augment identical supermarket sales, alleviate gross margin pressure, improve operating margin and enhance return on invested capital.
Per sources, Kroger is possibly mulling over purchasing America’s major online wholesaler — Boxed. The speculation is also rife about this Cincinnati-based company to acquire Overstock, an online retailer that offers home decor products and others.
Wrapping Up
Kroger, which shares space with Wal-Mart (WMT - Free Report) and Target (TGT - Free Report) , is leaving no stone unturned to attract consumers and attain incremental revenues. We believe that these strategies are likely to bolster performance and drive the stock further. In the past three months, shares of this Zacks Rank #3 (Hold) have surged 38%, outperforming the industry’s growth of 20.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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