In this article, we will see the SWOT Analysis of Kroger.
Kroger Company is a known retail company in America. In 1883, Bernard Kroger founded the retail company in Cincinnati, Ohio. It was started with the simple motto – “Be particular. Never sell anything you would not want yourself.”
Kroger operates as a leading company with over 2700 retail stores under various names. Its segments include supermarkets, warehouses, multi-departmental stores, digital shopping, pharmacies in the food and drug stores category and jewellery stores, and others. Its revenue generated is $132 billion in 2020. Its employee base includes over 400,000. It operates around 3000 stores worldwide.
SWOT Analysis of Kroger
The Swot Analysis for Kroger Company involves identifying and specifying the objectives and factors required to achieve those objectives of the business. Swot Analysis is helpful and helps to determine the strengths, weaknesses, opportunities, and threats that a company possesses. This helps develop strategies to overcome the shortcoming and betterment of the ongoing methods. The analysis is discussed on basis of two factors- internal factors and external factors.
Internal factors constitute the strength and weaknesses. External factors comprise the opportunities and threats.
Kroger is among the top companies in the market with over 2700 supermarkets in various states and most of these outlets have pharmacies and fuel centres as well. It offers a wide spectrum of stores including supermarkets, marketplaces, multi-departmental stores, jewellery stores, and pre-impact stores.
It offers a varied range of products, which provides convenience and helps boost customer preference and loyalty. Due to this large network of stores, it gains command as decision-makers over the supply chain management aspects. It also provides pricing power among suppliers and producers. Hence, the economy scale advantage compared to other smaller retail chains. It also follows a low-cost strategy and lowers product prices using cost-saving, which helps build customer loyalty and gather market shares.
Kroger invests its resources in the training and development of its employees. It has a strong skilled workforce which it has incorporated through various training and learning programs that have worked to do better with time and achieve more in the business.
Kroger also has expertise in entering new markets and gaining hold of it with success. Its expansion has built new revenue modes and decreased the economic cycle risk in the market. It has undertaken various new projects and gathered good returns on capital expenditures on them. It also has a proper supply, manufacturing, and providing chain that keeps them developing and fulfilling the needs of new and improved products in the market.
Private label product brands
Kroger has been promoting and emphasising on developing its private label brands and products. It provides organic goods and many other produce items to its customers with satisfying responses and this has helped it to build a customer base and provide products at cheaper prices to its consumers. It has a vast selection of brand items products including banner brands, private selection, and value segments.
It has also helped Kroger to save its money by investing in private label products as they do not need to spend on the suppliers. Rather it gives them bargaining power with them. And it benefits largely from its private-label portfolio as that keeps the margins of its products wider in the market.
They also invest in understanding the needs and provide personalised recommendations. Their digital shopping covers all the relevant products, coupons, smart shopping lists, weekly ads, and more to enhance the customer’s shopping experience.
Kroger has gained a high debt-to-equity ratio and its leverage ratio is also the highest amongst others. Financial planning is not properly initiated and the company shows inefficiency in its use of its cash or assets. It can improve and perform better with efficient planning and execution. Despite its huge market earning and sharing, it has accumulated a high amount of debts.
But high amount of debt leads to a struggle in availing further financing for more acquisitions and if it does not maintain a marked ratio, it will affect its ability to borrow. If it continues to plan expansion opportunities, it is likely to face financial and capitalization issues and indebtedness. Other factors such as market reduction in certain food prices and lower sales of certain items also affect the company’s payments.
This leads to the preference of other grocery stores for different products. Thus, it reduces and sells products at cheaper prices since it has to focus on building its name to keep the customers happy and loyalty to the brand.
The company has also suffered product recalls on some of its items due to health or misinformation or mislabelling issues which has led to a fall in the value of the product due to which the company suffers. Therefore, it has to keep informed of such incidents and resolve them.
Private Label Brands
The company has various opportunities to develop and build its private-label products lines. Its private brands have seen a rise in their market sales and have gained a customer base. It is an opportunity to present qualitative characteristics and Kroger’s impressive portfolio might also provide boost the product’s growth in the trends. It needs to find strategies to provide market space for its private products to thrive and also acknowledge and discuss regarding their distinguished qualities.
The emergence of the need for organic food within supermarkets and grocery stores has risen around 30% in a few years. In the US, the rate is around 12-13%. Due to this, the company also has to deal with the rise in demand for a higher quality of food-fruits and vegetables. It has started its private line of organic products to address this issue and combat the complaints and fulfil the requirements of the customers.
It can continue expansion in this section by producing whole foods and developing organic foods bases. They have been producing these under their private brand labels. This will also help them to effectively bargain and enter the organic market without extra operational costs.
Online Grocery Selling
E-commerce and the internet have transformed the manner of grocery shopping for many consumers. Most shoppers prefer to order grocery items online. And it is projected to continue to rapidly grow in the following years. Kroger has taken advantage of this by releasing a method of Click List, which allows customers to shop for the required goods online and then prepares the items for pick up by the customer or even provides delivery facilities for grocery items.
It has been successful with this. The company is trying to utilize smartphones by creating an application that will allow customers at participating stores to look up an item while shopping and have the application point out the exact location of that item in the store.
In-store shopping experience
Kroger has evolved its in-store experience during shopping for its customers. It has received acknowledgment for its work and also continues to utilize the upgrades in technology to aid the customers. Kroger analyses evaluate and stores data to study the demand of its customers and the market in real-time. It is well recognized for its appreciable customer service.
The company has risen at all levels and has developed its resources and connections well. But it too faces various threats with changes in the market and marketing trends. Kroger has varied differentiation which helps to reduce the extent it must face in price wars. It has developed various products but only in response to competition from rivals and development.
New technologies developed by competitors might pose a threat and affect long or medium-term sales. But intense competition might be led to a reduction in prices to avoid loss of market shares and prevent loss of sales. If competitive retailers increase discounting or other promotional activities, Kroger’s might face aggravated pricing issues. Also, a new realm of competition exists through electronic commercial networks.
Other digital retailers might also encroach upon Kroger’s sales as more consumers tend to turn to online shopping platforms and delivery capabilities due to their convenience.
The company needs to develop strategies for upgrading its position in the market. It needs to focus on the leading products that it has in the market and develop them to boost its sales. It needs to compete on a differentiation strategy basis along with a low-cost basis to lift its position.
Although it has financial shortcomings in its operations, Kroger can raise debt financial through the selling of debt acquirements to individuals or institutional investors for lending on the condition that it will be repaid.
It should explore and build strategies from its opportunities. It can develop means to provide aid to online shoppers. Kroger can differentiate itself and combat the intensifying competition in the market from its competitors. It needs to study the annual growth and report analysis to understand and develop various measures for overcoming its problems and developing its forte.
The company needs to identify the strategies that can be used to counter threats, exploit external opportunities, build on and protect its strengths, and eliminate its weaknesses.