STORE SPACES

Kroger CEO offers five predictions on future of retail

BY Marianne Wilson

Retail is not going away.

That’s one of several predictions the chief executive of supermarket giant The Kroger Co. offered on the future of retail during a keynote presentation at NRF 2019: Retail’s Big Show, which was held at the Jacob K. Javits Convention Center.

Rodney McMullen also announced that Kroger has established a public charity to encourage innovative thinking in the area of food waste prevention. In February, the retailer will issue its inaugural open call and will award up $1 million to for-profit and non-profit innovators developing solutions for food waste prevention to test and scale solutions.

Here is how McMullen’s predictions stack up.

1. Retail won’t go away. The industry experiences disruption and transformation every few years, but it’s happening at a more rapid speed than ever before. Leaders in the industry must be willing to not only accept and react to change, but also transform their growth model.

2. Retail will be digital and physical. Technology and digital are already mainstays of today’s retail, but in the future customers will not spend meaningful time thinking about physical vs. digital. Customers will always choose the shopping modality – whether physical or digital – that will deliver anything, anytime and anywhere.

3. Retail will offer new solutions to customers. Retailers will create solutions on customers’ terms. That is why Kroger is building an ecosystem that offers a variety of modalities, including brick and mortar, delivery, pick up and ship.

4. Retail will be purpose-driven. Retail will solve problems not only for customers, but also for communities and the planet. Stakeholders are increasingly deciding which businesses to support based on shared values and clarity of purpose. McMullen said that because of Kroger’s Zero Hunger | Zero Waste commitments by 2025, the company decided to phase out use-once, throw-it-away plastic bags and transition to reusable bags in its stores on the same timeline.

5. Retail will disrupt the ad industry. Advertisers spend $100 billion annually today, and retailers are uniquely positioned to know how customers behave and react to those marketing messages. McMullen said that is why Kroger introduced Kroger Precision Marketing, powered by 84.51. It provides consumer packaged goods advertisers the ability to reach Kroger’s more than 60 million customers through its ecosystem more precisely with measurable results.

While on stage, McMullen also discussed Kroger’s Our Brands portfolio, which is one of the most profitable parts of the company’s supermarket business. He noted that Kroger recognized an appetite for its Our Brands products, such as its natural and organic brand Simple Truth, in markets where the retailer doesn’t have a physical footprint, which had led it to relationships with Alibaba and Walgreens. In five years, Simple Truth has grown into the largest natural and organic brand in the country, topping more than $2 billion in sales annually.

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