CINCINNATI - The Kroger Co. launched three new discount brands at its annual meeting Thursday.
And, if its previous launches are any indication, the new private-label products will grow to more than $1 billion in revenue – just like Simple Truth is expected to achieve in 2014 and Private Selection did before that.
“It’s early in the process. Time will tell,” said Kroger CEO Rodney McMullen. “We think it’s very important for the customers to have an entry price point item that they can feel comfortable with the quality and the variety. That’s really what we’re trying to do there.”
Kroger is replacing its banner-branded value brands like “Kroger Value” with three new product lines:
- Shelf-stable foods like cereal and canned vegetables will be marketed under the name, “P$$t … big savings.”
- Fresh meats and packaged vegetables will be sold under the brand name, “Heritage Farm.”
- Non-food items, including toilet paper and disposable plates, will be sold under a yellow logo that reads: “check this out … big savings.”
McMullen said the new product lines took up to 18 months to develop, a process that involved customer research, package design and product formulation.
Kroger generates more than $6 billion in revenue a quarter from its private-label products, which accounted for 24.5 percent of total sales excluding fuel in its fiscal first quarter ended May 24.
Kroger markets its private-label products under a “Good, better, best” format. Prior to today’s launch, its most recent effort was Simple Truth, which launched 100 new products in the last year and is on pace to be a billion-dollar brand by the end of this year.
“You don’t focus on trying to make a billion-dollar brand,” McMullen said. “You focus on trying to make something the customer wants and connects with.”
Downtown Store In The Works?
McMullen also revealed that Kroger is working with the University of Cincinnati design students on concepts that could be part of a new downtown store.
“We do need to be Downtown,” McMullen said. “It’s just a matter of finding the right location and being able to get everything to work.”
WCPO reported in May that Kroger is taking a new look at placing an urban-format store in Cincinnati’s central business district, following the acquisition of Harris Teeter, which has 13 such stores on the East Coast.
Kroger President and Chief Operating Officer Mike Ellis said the company “has come close a couple of times” and will “stay on it until we find a location” that works.
“I was here in ’04 and ’05, actually lived across the street from the Gateway project,” said Ellis “I went back to the West Coast and came back. I’m shocked at the growth and the vibrancy of downtown now. It’s really fun.”