Kroger: Full Steam Ahead

Joseph Pichler, chairman and ceo of Kroger Co. (Cincinnati), told shareholders that the retailer would be concentrating on building gasoline pumps in Kroger locations (up to 170 stores by the end of the year); more local acquisitions (now that the company has absorbed the $13.5 billion acquisition of Fred Meyer Inc. in 1999); and spending $100 million next year to expand the Fred Meyer and Food 4 Less nameplates into other markets (though he wouldn't say whether the names would be extended outside the Pacific Coast).

Pichler identified a number of areas for future growth and expansion: (1) Kroger currently sells gasoline at about 114 of its stores and should add another 40-60 stores this year. (2) While there already are more than 1600 pharmacies in Kroger-owned stores, he hopes to add more. (3) He hopes to build on the retailer's natural-foods selection. Kroger currently operates 725 specialized natural-food departments, including more than 100 “stores within a store” dedicated to what Pichler called the explosive growth in that area. “Americans are more and more concerned about their nutrition and health,” he said, “and the products are starting to taste good.” (4) Pre-merger Kroger divisions have raised private-label sales to about 26 percent of total grocery sales, he noted, and the company is trying to raise private-label sales at Fred Meyer-owned stores.

Pichler noted in his determinedly upbeat pronouncements that most consumers give up luxuries before cutting back on grocery-store purchases, so Kroger should not suffer as much as many retailers from the softening U.S. economy.

Kroger is the nation's Number One full-line grocery retailer. At the end of 1999, the most recent figures available, it had nearly 3500 stores and an annual sales volume of $45.3 billion, second only to Wal-Mart.