Kroger's Fresh Evolution

New stores offer hot prepared food alongside fresh fill-in, with room to grow

By  Samantha Oller, Senior Editor/Special Projects Coordinator

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At a new Loaf ‘N Jug convenience store in Colorado with a sprawling mountain backdrop, an experiment is taking place. The goal: determine the right mix of freshly prepared food, grab-and-go eats and take-home staples that will serve customers’ convenience and fill-in shopping needs.

“We are still a convenience store—that was a key for us,” says Van Tarver, vice president of The Kroger Co.’s Convenience Stores Division and the Supermarket Petroleum Group, based in Cincinnati. “We will not tell you that we have this right yet. What we’re trying to find out: Is there a format where we can solve more of the customers’ needs in that regard and meet their need with other products like fill-in shopping with a reasonable value?”

The Kroger convenience team provided CSP with an exclusive tour of its newest stage in the evolution, a 7,500-square-foot Loaf ‘N Jug Market in Colorado Springs, Colo. The impressive store, with stone accents outside and an open, bright feel that emphasizes fresh, opened in 2013. It is positioned to answer the question of what needs a c-store can fulfill, while also testing how to bring greater consistency across Kroger’s many c-store banners.

Kroger has six c-store divisions that span the country, including Quik Stop Markets, Smith’s Express and Loaf ‘N Jug in the West; Kwik Shop in the Plains states; Turkey Hill Minit Markets in the Midwest; and Tom Thumb Food Stores in the Southeast. Together, they represent nearly 790 stores in 19 states. Each division—c-store chains that Kroger has acquired through the years—has its own headquarters and management team, and in the past had followed its own retail path.

But in 2006, Kroger began to bring greater consistency across the banners, beginning with the rollout of a single logo for all. More recently, the convenience group has worked to capture operational efficiencies in foodservice and share best practices. And it is leveraging its valuable relationship with Kroger’s supermarket operations, the largest in the United States with more than 2,400 sites in 31 states.

According to Art Stawski, president of Loaf ‘N Jug, Pueblo, Colo., his division first experimented with this c-store fill-in concept at another, smaller site in Fountain, Colo., and learned greatly from the experience.

“More than anything, it’s really learning what that fill-in shopper is looking for, and making some tweaks to the product selection: produce, meat and frozen,” says Stawski.

A large produce section, complete with misters and scales, offers a selection of fruits, vegetables and salad items. Just across from it, echoing the company’s supermarket underpinnings, is an open-air fresh-meat cooler stocked with everything from breakfast sausage to family-size packages of chicken, ready to make into a meal. In the grocery aisles, take-home sizes of chips, cookies and household fundamentals help round out the possibilities.

It’s a concept that is also playing out a few states over in Ohio, where Turkey Hill Minit Markets has finessed the fill-in offer at three sites, providing a similar mix of fresh produce and take-home staples. Like all of its retail initiatives, Kroger’s pursuit of the fill-in opportunity was triggered by internal research and customer requests.

At the same time Kroger’s convenience team is directing this fill-in shopping revolution, it is also raising its foodservice game, with a sophisticated new pizza program, made-to-order subs, breakfast  sandwiches and Chester’s Fried Chicken. The retailer sees enormous potential in increasing the consistency of the foodservice program across all of its c-store banners, with upgrades in equipment while testing new offers and promotions. In July 2013, the convenience group established a c-store foodservice team charged to do exactly that. Many of these efficiencies will begin to be realized in 2014.

“The businesses have operated autonomously for so long,” says Rod Taylor, director of c-store foodservice for Kroger Convenience. “They’ve done a really good job of maximizing sales. There’s an opportunity to become more uniform in the way we approach our business.” One example is moving all sites to best-in-class coffee brewing and fountain equipment, a process that continues today.

And similar to its careful, staged test of the fill-in concept, Kroger’s convenience team has evolved its foodservice offer. For example, while its Turkey Hill Minit Market site in Marysville, Ohio, offers hot fried chicken and biscuits from Chester’s Fried Chicken, its Colorado Springs Loaf ‘N Jug has added pizza to the menu.

From the convenience group’s perspective, despite the potential rewards from greater consistency, there is no belief that the foodservice or fill-in offers need to be one size fits all. Instead, the retailer gauges store footprints and demographics to hone the offer.

In fact, just a mile away from the Colorado Springs site, Loaf ‘N Jug is building a smaller, more traditional c-store. “Will we take pieces of what we’re doing here? Maybe,” says Stawski. “We’re going to try to figure that out.”

“Customer data will tell us what to build,” says Tarver. “Our results and customer data will tell us what we need to do.”

UP NEXT: A PHOTO TOUR THROUGH ONE OF THE NEW LOCATIONS

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