Kroger looks to ride digital tailwind

E-commerce sales boom seen as sign of more growth to come

 

Russell Redman, Supermarket News

Jun 19, 2020

 

Executives at The Kroger Co. said a 92% jump in first-quarter digital sales shows that the supermarket giant’s e-commerce investments are bearing fruit.

 

Overall sales for the quarter ended May 23 climbed 11.5% to $41.55 billion, with identical sales excluding fuel surging 19%. In a conference call with analysts on Thursday, chairman and CEO Rodney McMullen estimated that digital sales accounted for 6.5% to 7% of Kroger’s total sales in the period.

 

“Kroger began investing in digital several years ago to build a seamless ecosystem that would deliver anything, anytime, anywhere. As a result, we have over 2,000 pickup locations and 2,400 delivery locations, reaching 97% of our customers, with a seamless customer experience that combines the best of our physical stores with digital,” McMullen said. “These investments were especially timely, as customer adoption of pickup and delivery grew significantly during the pandemic. And because of our existing ecosystem, we were able to respond quickly to further expand and enhance our e commerce services.”

 

For example, Kroger expanded no-contact delivery and low-contact pickup services as well as contact-free payment solutions, such as Scan, Bag & Go and Kroger Pay, he explained. To support increased volume in pickup orders, the company hired more e-commerce associates, added more order pickup slots, stepped up the frequency of communications with customers and began testing a grocery pickup-only location in Cincinnati, he added.

 

“All of this contributed to a 92% sales growth in digital channels in the first quarter. In April and May, the sales grew in the triple digits,” McMullen said.

 

According to Chief Financial Officer Gary Millerchip, digital sales contributed slightly more than 3% to identical sales excluding fuel in the first quarter.

 

“New customer engagement with our pickup and delivery services spiked significantly during the quarter, and we have been encouraged by early customer repeat usage. Digital sales in the second quarter remain elevated, up triple digits in the first three weeks,” Millerchip told analysts. “We continue to invest in digital and offered a fee-free pickup promotion to provide more value for our customers in ways that are most relevant at this time. We were also excited to announce several new enhancements to our digital customer experience, including the launch of our check-in on arrival option for pickup customers and the launch of contactless doorstep delivery.”

 

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