Retail giant Kroger introduces low-cost food brand as a part of revised store brand strategy

USA- Cincinnati-based retail chain Kroger has launched Smart Way, a budget-friendly private label brand aimed at budget-conscious shoppers grappling with high grocery prices.

According to CEO Rodney McMullen, the move is part of a revised store brand strategy that will see the supermarket reduce its brands from 17 to just two.

Smart Way is now its value brand for nonperishable commodities while Heritage Farms will become the value brand for fresh and dairy products.

Products under the Smart Way Brand will include non-food items like boxes of napkins and jarred pickles from the grocery store as well as food-related items like four packs of canned corn and jarred pickles.

The brand name is written in lower case on the orange-and-white label, which also includes the phrases ” smart ways to save every day” and “saving in the right direction.”

“As our customers face an ongoing inflationary environment, we know they are looking to stretch their dollars further than ever before,” stated Stuart Aitken, senior vice president, and chief merchant and marketing officer at Kroger.

“Smart Way is an exciting, eye-pleasing product line that will be easy for customers to find. By adding a simplified opening price point brand strategy to Our Brands portfolio, we will further cater to every customer, every time.”

Our second-quarter results provide another proof point that Kroger has the right go-to-market strategy

Chief Financial Officer Gary Millerchip, Kroger Tweet

Meanwhile, Kroger’s store brands experienced a 10.2% increase in equivalent sales during the second quarter of the company’s fiscal year.

Compared to US$467 million, or 61 cents per diluted share, a year earlier, Kroger reported a 2022 second-quarter net income of US$731 million or US$1.00 per diluted share.

Adjusted net earnings were US$661 million, or 90 cents per diluted share, as opposed to US$610 million, or 80 cents per diluted share, in the prior-year period. This is when adjustments for investment gains and the Home Chef contingent consideration were excluded.

“Our second-quarter results provide another proof point that Kroger has the right go-to-market strategy,” according to Chief Financial Officer Gary Millerchip.

He added that their consistent execution of the strategy is building momentum in the business which, combined with sustained food-at-home trends, gives them the confidence to raise their full-year guidance.

According to CFRA Research analyst Arun Sundaram, Kroger has benefited from higher grocery and gas prices, but this advantage is likely to fade over time.

Sundaram observed, “We see wage pressures continuing in fiscal 2024, which along with weaker identical sales growth will likely lead to weaker operating margins next year.”

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