Kroger doesn’t play favorites with its private label items. Like baby birds, store brands are expected to learn to fly the nest or risk getting kicked out entirely.
In this case, the mother bird is the category manager. Kroger leaves it to them to make the hard decisions around assortment.
“So once it's on the shelf, the category manager would have sole authority over that category to discontinue an item — whether it's a corporate brand item or a natural brand item,” said Kroger CFO Michael Schlotman at the Jefferies Global Consumer Conference this week.
“The corporate brand folks couldn't say, ‘But it's a corporate brand. Keep it.’ It's not good for the category overall if you have items on the shelf that aren't moving because it can degrade the view of the category.”
As Kroger expands its corporate brand offerings, it also discontinues items that don’t perform, said Schlotman.
“While they [private brands] may find their … way on the shelf a little bit easier than somebody coming in to try to sell us a new product. If they don't pull their weight on the shelf by sales, they will get discontinued.”
Kroger may look at why the store brand product isn’t selling and improve it.
“But there's a reason customers aren't accepting it, and our job is to give the customers more of what they want."
This unbiased commitment to product performance likely helped the supermarket giant attain 25% of sales dollars in the first fiscal quarter, excluding fuel and pharmacy, and almost 27% of total sales volume.
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