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IBM has announced a major Blockchain collaboration with several retail and FMCG businesses. The group includes Dole, Driscoll’s, Golden State Foods, Kroger, McCormick and Company, McLane Company, Nestlé, Tyson Foods, Unilever and Walmart. The businesses will work with IBM to explore how Blockchain can be used to benefit the global supply chain.

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As part of its new 'Sustainability Lives Here' campaign and the latest development of its 2020 Sustainability Goals project, Kroger is offering customers digital coupons targeted towards sustainable products.

New website to support the program and broader sustainability initiatives

The digital coupons are being made available at a new website to support the programme, They are targeted towards certified products such as Fair Trade, Rainforest Alliance, Forest Stewardship Council, along with organic and natural products across its departments. The website also provides customers with an in-depth look at the retailer's sustainable supply chain initiatives and recipe ideas based on environmentally friendly products. It also provides customers with ideas around reducing food waste and eating well.

Aligns with Kroger's corporate sustainability focus

The campaign is being launched to coincide with Earth Month, and aligns with Kroger's corporate sustainability focus, 2020 Sustainability Goals. This includes a goal of zero waste designation by 2020. The retailer is also running a number of programs to optimise private brand packaging and improve transport efficiency by 20% by 2020. This initiative will help Kroger to raise awareness of its sustainability-focused products and enhancing its credentials in this area.

Following its 2016 results, Kroger remains focused on its long term strategy of investing in its people, the business and technology to deliver for its customers.

Sales driven by acquisitions

Despite the operating environment being more challenging than expected, Kroger achieved sales of $115.3bn for 2016, up 5% on 2015 or 1% on a like-for-like basis.The deflationary conditions have driven lower than expected Q4 sales for the retailer, with same store sales dropping for the first time in 52 quarters, by 0.7% (excl fuel). However, overall sales for the quarter grew by 5.5% in the quarter, driven by the acquisitions of Roundy's and ModernHEALTH during the year. This is the 12th consecutive year of market share gains for Kroger and net profit for the year grew by 3.1% to $2bn.

Increasing online capabilities

ClickList has been the main focus for Kroger over the past year, with new locations opening rapidly. During 2016, the retailer opened more than 420 ClickList and Express Lane locations, bringing the total to over 640. The acquisition of Harris Teeter in 2014 allowed Kroger to accelerate the rollout, inheriting 140 pick up locations and taking the learning's from the business to influence its own model. The retailer has been using data and insight from its 84.51º division to inform its decisions on which locations to offer the services at, as well as how best to engage with customers online.

Testing last mile delivery options

Kroger also offers a home delivery service in two markets. For years it has been available in Denver as a test market, but with grocery ecommerce starting to accelerate in the US, it is looking into expanding this, in order to offer customers the shopping experience most convenient to them. It is also in the early stages of testing a number of different delivery services, including a partnership with Uber, which allows customers to order their groceries and have them delivered by an Uber driver.

Outlook for 2017

Excluding fuel, Kroger expects same store sales to perform in the region of 0-1% growth in 2017. Due to continuing deflation in the operating environment, it expects the first half of 2017 to be similar to the second half of 2016, with improvements happening in the second half of the year. Capital expenditures, excluding mergers and acquisitions, are forecast to be $3.2-$3.5bn in 2017, and will be focused on sales generating initiatives, remodels, upgrading the logistics network and digital and technological initiatives.

Looking for more on Kroger?

Check out our Kroger supply chain snapshot - an essential summary of supply chain priorities, latest network developments, and other key statistics for Kroger.

Kroger has announced plans to upgrade its operations.

$355m project

Due to ongoing growth, Kroger's success is putting undue strain on its logistics capbilities. According to press reports, Kroger now plans to spend around $355m to upgrade its logistics capabilities this fiscal year. The retailer will kickstart the project by shortly opening a new distribution centre for short shelf life goods in Cincinnati.

Playing catchup

At Kroger's 2016 investor conference, the retailer's chief financial officer, Mike Schlotman, commented: "We have a lot of pinch points today that have been created in our logistics systems. It wasn’t built to handle the ID sales growth we’ve had...We’ve always had an approach at Kroger of, ‘let’s go get the business and build the logistics system to catch up. So in some geographies, we’re playing a bit of catchup."

Looking for more on Kroger?

Check out our Kroger supply chain snapshot - an essential summary of supply chain priorities, latest network developments, and other key statistics for Kroger.


An essential summary of supply chain priorities, latest network developments, and other key statistics for Kroger.
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