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‘No longer niche,’ Kroger increases presence at NatExpo West

BY Michael Johnsen

Kroger on Tuesday shared its participation in the NatExpo West event in Anaheim, Calif. as part of its effort to continue building relationships with emerging brands.

“This is Kroger’s 16th year to participate in Expo West,” Jill McIntosh, Kroger vice president of natural foods, said. “Through our exclusive First Pitch and Town Hall events, we are increasing our presence and accessibility at the NatExpo West. This year is our biggest activation. We will have more than 40 Kroger representatives participate, ranging from buyers and category managers to merchandising executives.”

Kroger anticipates a robust number of suppliers engaging with the company’s representatives during its First Pitch event, which provides innovative, ready-to-go-to-market businesses the opportunity to present their products to the retailer.

“Our customers’ appetite for better-for-you products continues to grow year-over-year. The natural foods category has become mainstream — it is no longer a niche market,” added McIntosh. “Along with growing our Simple Truth brand, which reached $2 billion in annual sales in 2017, we will continue to focus on developing new partnerships at micro and macro levels to expand this category. Innovation is key in this space and this is one of the reasons we have attended Expo West since 2002 and recently started our Natural Foods Innovation Summit series.”

Kroger’s Town Hall will focus on its merchandising leaders sharing the Restock Kroger plan along with hosting discussions about ecommerce and Kroger Precision Marketing powered by 84.51° in front of an anticipated group of 500 individuals representing more than 270 suppliers. During the event, industry leaders, including CPGs and Kroger’s own Simple Truth and sustainability experts, will lead a panel about sustainable practices, a focus of the natural foods industry.

The Town Hall will also feature a celebrity chef tasting that spotlights Kroger’s Zero Hunger | Zero Waste initiative, which aims to end hunger in its communities and eliminate food waste in its company by 2025. Kroger is partnering with three distinguished chefs — Roy Choi, Phillip Frankland Lee and Chelsea’s Messy Apron — to host the event.

Kroger will host its third Natural Foods Innovation Summit this June in Cincinnati, Ohio.

 

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Amazon expands Whole Foods delivery service

BY Deena M. Amato-McCoy

Amazon is expanding its grocery delivery service from Whole Foods Market to two new markets.

On Tuesday, the companies launched free, two-hour deliveries of natural and organic products from Whole Foods through Prime Now in Atlanta and San Francisco. The program initially launched last month in Austin, Cincinnati, Dallas and Virginia Beach, with plans for continued expansion across the U.S. throughout 2018.

Through the service, Prime members can order from “thousands of items” across fresh produce, bakery, dairy, meat and seafood, floral, among other everyday staples, all locally sourced items from Whole Foods Market. Select alcohol is also available for delivery to customers in San Francisco.

Prime members receive two-hour delivery for free, or they can pay $7.99 on orders of $35 or more, if they need groceries to arrive within an hour.

Customers can create an orders by visiting the Whole Foods Market selection on the Prime Now app available on Android and iOS devices, or on the Prime Now website.

The expansion coincides with Amazon’s ongoing efforts to integrate the two companies. Last month, the online giant announced that Prime members using their Amazon Prime Rewards Visa card at Whole Foods now earn 5% back on all purchases. This is in addition to the rewards they already receive, including 5% back on all Amazon.com purchases, 2% at restaurants, gas stations and drugstores, and 1% on all other purchases.

Non-Prime members that have the Visa card are entitled to 3% back. They also receive 3% back on all Amazon purchases, 2% at restaurants, gas stations and drugstores, and 1% on all other purchases.

Amazon acquired Whole Foods for $13.7 billion in September 2017.

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Target’s sales on the rise in Q4 results

BY Marianne Wilson

Wage increases took a bite out of Target’s profit in the fourth quarter even as its sales surpassed Street expectations and its digital channel continued to make impressive gains.

Net income for the quarter ended Feb. 3, which included an extra week, rose to $1.10 billion, or $2.02 a share, from $817 million, or $1.45 a share, in the year-ago period. Excluding non-recurring items, including about $388 million benefits from recent tax legislation, adjusted earnings per share came to $1.37, which was one penny short of analysts’ forecasts.

Target said investments in its employees increased the chain’s expenses and put a dent in profit margins. In October, the retailer raised its minimum wage to $11 an hour, with plans to increase it to $15 by the end of 2020.

Analyst Neil Saunders, managing director, GlobalData Retail, commented that Target’s excellent sales results “more than justify” its increased costs.

“We are encouraged that the 3.6% uplift in comparables was driven by an evenly split contribution from stores and online,” Saunders said. “Not only does this indicate that Target’s omnichannel strategy is delivering, but it also shows that the store enhancements are working. In essence, it justifies Target’s view that stores remain a critical part of the proposition and are worth spending money on.” For more, click here.

Sales rose 10.0% to a better-than-expected $22.8 billion from $20.7 billion last year, reflecting the impact of an additional week in this year’s fourth quarter. Same-store sales increased 3.6%, better than analysts had expected. Traffic rose more than 3%.

Comparable digital sales surged 29% and contributed 1.8 percentage points of comparable sales growth. Digital sales accounted for 8.2% of the company’s revenue mix in the fourth quarter, compared with 6.8% a year ago.

“Our fourth quarter results demonstrate the power of the significant investments we’ve made in our team and our business throughout 2017,” said Brian Cornell, chairman and CEO of Target Corporation. “Our team’s outstanding execution of Target’s strategic initiatives during the year delivered strong fourth quarter traffic growth in our stores and digital channels, which drove healthy comparable sales in every one of our five core merchandise categories.”

Target has been rolling out exclusive brands and limited-time partnerships, its newest being with British heritage brand Hunter. The company is also in the midst of a major update of its stores. On Monday, Target announced it will remodel 325 stores this year, on the heels of some 110 remodels in 2017.

In the first quarter of 2018, Target expects a low-single-digit increase in comparable sales and adjusted EPS of $1.25 to $1.45.

For full-year 2018, Target expects a low-single-digit increase in comparable sales and adjusted EPS of $5.15 to $5.45.

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