Dive Brief:
- Kroger says it plans to expand its Simple Truth natural and organic brand this year, according to a press release. The line currently has more than 1,400 products, with sales up 19% in the most recent financial quarter.
- The Cincinnati-based retailer didn't say how many new products it would introduce, though it did single out beverages, snacks and non-animal proteins for expansion. The company noted it will continue to rely on its 84.51 data firm to inform Simple Truth's growth and innovation.
- Kroger's private label offerings — or "Our Brands," as the retailer refers to them — comprise 28.2% of unit sales and 25.6% of sales dollars, excluding fuel and pharmacy. "Our Brands is shaping the way we are redefining the grocery customer experience as outlined in our Restock Kroger plan," Robert Clark, Kroger's senior vice president of merchandising, said in a statement.
Dive Insight:
Kroger has grabbed headlines lately with its moves outside of grocery, but two of its greatest advantages lie in its use of data and its private label selection. With this move — a no-brainer, considering Simple Truth's popularity — the country’s largest grocer plans to leverage both of these strengths.
Since its debut in 2012, Simple Truth has grown into a nearly $2 billion business that touches everything from sports drinks to meatless entrees and baby food. Kroger’s sales of natural and organic products has ballooned over the past several years — it's been a real thorn in the side of Whole Foods — and Simple Truth has been on the front lines of that evolution.
The retailer's 84.51 data firm, meanwhile, has helped the company surgically identify opportunities for growth and innovation, and should continue to do so. Although other grocers have narrowed the gap on data utilization, Kroger still remains a leader in this all-important field. During Kroger's investors conference last fall, Stewart Aitken, CEO of 84.51, said the firm sees 96% of every transaction, including what other stores customers shop, what car they drive, whether they use an Android or iPhone, and numerous other metrics.
The three categories Kroger named as expansion priorities for Simple Truth are some of the fastest-growing segments in the industry. Snacking is now a multibillion dollar industry, with products like bars and beef jerky leading sales. Growth of plant-based foods is accelerating, and now accounts for more than $3 billion annually, while beverage consumers continue to reward innovations in taste and health.
Other retailers have caught on to the opportunity natural and organic store brands offer, including Ahold Delhaize, which recently announced it will combine its various natural and organic store brands, which see annual sales of $1 billion, under the Nature’s Promise established by its Stop & Shop banner. Aldi has numerous award-winning private brands, while Amazon has pushed sales of Whole Foods' 365 Everyday line on its website.
Building brand loyalty amidst this competition will be tough, but Kroger has some tricks up its sleeve. Simple Truth has a dedicated website that offers product information along with recipes, and is currently offering $100 in digital coupons to shoppers.
