Chasing the Customer … Klobbers!

 Kroger Klobbers!

Data & Digital Power!!

Kroger  Amazing !!!

 

Consider what the Kroger management team, Dave Dillon and Rodney McMullen and the Kroger employees have done. 10+ years of  ¼ / ¼ consecutive growth. Plus:

  • logo_krogerImpressive growth in a challenging retail environment
    • Revenue gains similar to Amazon.com
    • Both Kroger and Amazon are growing revenue at two to three times the rate of Walmart
  • Beating Walmart at its own deep discount and variety strategy
  • Developing its HomeShop delivery service as a counter / threat to Amazon Prime and Walmart to Go

 

Diversified for Continued Growth

 

Kroger store

 

Kroger is a diverse retailer:

Convenience Stores – 787

Grocery Stores – 2,642

Pharmacies – 2109

Gas Stations – 1261

Jewelry Stores – 324

Medical Clinics – 116

Kroger is a tough well managed competitor. It’s two biggest retail rivals, SuperValu and Safeway had such a tough time competing with Kroger and Wal-Mart that they decided to sell themselves to venture capitalists who are proceeding to drastically reorganize their operations.

 

Kroger Is A Digital Force!

 

 

e-Commerce

In the Brick Meets Click evolution, Kroger has a huge advantage over both Amazon and Google.  Kroger has the resources and expertise to compete directly with Amazon Prime Fresh without major capital outlays. Kroger can simply use existing stores and inventory as “fulfillment centers” for HomeShop without major capital outlays.

Recently acquired Vitacost.com which is an e-retailer whcih delivers everything from vitamins to groceries. (According to a 2013 UPS study, 44% of participants wanted the option to order online and pick-up in-store.) Kroger got a fully operational e-commerce platform. The near-term impact of the Vitacost acquisition should be minimal to the Kroger P&L.

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Digital Marketing

This is important! Kroger has moved and is moving to a customer – centric business model with a focus on loyalty and personalized coupons, incentives and information. They have developed very sophisticated CRM strategies and tactics and now, through mobile, are developing a CJM or Customer Journey Management capability.

This means that Kroger can be less dependent on mass media expense and move to a higher ROI targeted digital marketing strategy.

 

Digital Case Study

Phones held high mobileIn November of 2014, more smart-phone owning moms visited Kroger than any other chain — more than double the number of their nearest competitor. (Moms with kids are a key retail grocery segment.)

A report in Mobile Commerce Daily reported that 13.7% of U.S. smartphone owning moms visited Kroger. [Placed Survey of 5,221 U.S smartphone females with children]

In its Q2 investors call, Kroger management claimed its app was in the top 2% of most downloaded apps in Apple’s app store. Management also pointed out that digital was helping to drive its increased revenue.

 

Kroger Makes The Numbers!

 

numbers

 

If the marketplace environment is tough … Kroger management is tougher. Check out the comparative TTM Return on equity rate as reported in April 2014:

Kroger – 31.5%

Wal-Mart – 21.71%

Amazon – 3.24%

 

So far this year Kroger is out-performing:

 

  1. … many top technology companies in Stock Return … Kroger 23.9% – NetFlix 20.9% – Apple 19.0% – FaceBook 14.8% and Google 2.0%
  2.  The Grocery industry is growing at about 0.76% through 2016. Kroger has been growing at about 5.7% since 2008.
  3. Whole Foods, which has very high margin rates, has a net profit of 4.1% while Kroger is at 1.5%. However, because of astute management, Kroger has an ROE of 33.2% vs. Whole Foods, 14.7% an incredible 18.5% difference.  By additional comparison, other competitors are Delhaize, 4.1%, Safeway, 2.1% and SuperValu, Inc. (shareholder deficit).
  4. Kroger out-performing S&P 500 and many top technology stocks.
  5. Kroger’s growing far above the industry growth rate and maintaining above average profit margins.
  6. Great history of stock buyback and dividend growth.
  7. Continue to rely on dunnhumby data to guide customer centric marketing strategy.

 

Kroger’s Stock Has Risen 118% In The Last 5 Years

 

Thanks Guys!

 

Rodney mcmullen 2 Dave Dillon 2

 

 

 

 

 

 

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