Kroger: Latest partnership and discount format expansion

Date : 07 April 2016

Kroger is to collaborate with Colorado based organic specialist, Lucky's Market. In other news, it has announced it will be expanding its discount format, Ruler Foods.

Strengthening its organic credentials with Lucky's

Following on from a series of acquisitions, Kroger has announced a partnership with Lucky's Market, just months after its last addition, Roundy's in December 2015. Lucky's, which operates 17 stores, specialises in organic and natural foods, with stores averaging 30,000 sq ft. Its tagline is 'Organic for the 99%,' summarising its purpose which is to offer affordable healthy, organic products to everyone. The stores are designed to resemble an indoor farmers market and create an inviting shopping environment.

Private label development

Lucky's has a well established private label brand, offering a broad range of grocery items that have no artificial colours, flavours or preservatives. With Kroger investing heavily in its own organic private label brand, Simple Truth, as well as continuing to focus on the wider health and wellness channel, the collaboration with Lucky's seems to be a complimentary fit. One of the elements of Kroger's Customer 1st Strategy is to provide people with affordable organic and natural foods and this move helps to achieve this.

Discount format Ruler Foods expanding

Kroger currently operates 43 Ruler Foods stores across six Midwest states, and is set to open another ten in 2016. Ruler Foods is a hard discount format, operating 'no frills' warehouse style stores. The stores stock a high proportion of own brand products (around 80%), helping keep margins low, and staff costs are reduced by not providing a bagging service. The average store is around 20,000 sq ft, much smaller than a typical Kroger Marketplace store and offers only groceries, with no additional services.

With German discounter Lidl set to enter the US market in 2018, it will be interesting to see how Kroger and other major retailers in the US develop strategies for its arrival.