Kroger Swot Analysis
Strategic Management
Analyzing a Firm
Kroger Co.
Kroger Co. was founded over 125 years ago and is one of the largest retailers in America with over $70 billion in sales for 2008. Kroger operates under various banners, including QuikStop, Fred Meyer, Dillon’s and Kroger Personal Finance. The company has over 323,000 employees. As of early 2008, Kroger Co. operated 2,486 supermarkets and multi-department stores.
Objective
The Kroger Co.'s philanthropic objective is to enhance the quality of life in communities with a concentration of Kroger customers and employees. The Kroger Co. Foundation was created to help the Company meet this goal.
General Guidelines
The Foundation exists for the betterment of the people and communities …show more content…
where The Kroger Co. has operations. Therefore, only organizations that serve the geographic areas where their Company operates are eligible.
Here is a quick summary of eligible grant requests:
. Local United Way campaigns
. Local educational organizations, primarily K-12 schools
. Local hunger relief organizations
. Local breast cancer and women’s health initiatives
. Local organizations that support and promote the advancement of women and minorities
.
Local grassroots community organizations
. Capital campaigns; start up grants; and funding for special projects
Strengths: Kroger Co. has a significant market share in 44 markets covering 31 states. This geographical diversity helps the business sustain its competitive strengths. With a valuable private label business, innovative formats and customer service focus, the company can compete against the likes of Wal-Mart super-centers.
Weaknesses: Kroger Co. operates 42 manufacturing plants including dairies, bakeries, beverage plants, and meat plants. Food manufacturing represents a risk of food contamination. A serious contamination can damage the company's brand and hurt corporate profits.
Opportunities: The expansion of the company in 2007 into the finance market provides a strong future opportunity. The Kroger Personal Finance brand provides convenience to grocery shoppers and can potentially mimic the success of Canada's grocery banking, President's Choice Financial.
Threats: A slowing economy with higher levels of inflation affecting the price of food and greater fuel costs impacting transportation cost, the Kroger Co. can have lower profit margins. Cost conscious consumers will shift their buying habits to less high-end foods and gourmet items (with greater margins) to lower margin food …show more content…
items.
Philosophy
Market share is an important part of their long-term strategy as it best reflects how their products and services resonate with customers. Market share growth allows them to spread the fixed costs in their business over a wider revenue base. Their fundamental operating philosophy is to maintain and increase market share by offering customers good prices and superior products and service. Based on Nielsen Homescan Data, their estimated market share increased in total by approximately 80 basis points in 2010 across the 19 marketing areas outlined by the Nielsen report. This information also indicates that their market share increased in 13 of the marketing areas, declined slightly in four, and remained unchanged in two. Their overall market share grew by approximately 75 basis points in 2010 in 17 of the 19 marketing areas where Wal-Mart supercenters are a primary competitor. Nielsen Homescan Data is generated by customers who self-report their grocery purchases to Nielsen, regardless of retail channel or grocery outlet. This data illustrates that not only are they growing bigger among traditional grocers, they are also gaining ground in the larger retail market for grocery and consumable items, which includes many non-traditional competitors. These market share results are consistent with their long-term strategy.
Structure
De-Centralized Operational Environment created through years of company acquisition.
Through years of growth via acquisition, Kroger's supply chain had become fragmented and de-centralized. This structure did not enable Kroger to take advantage of economies of scale across their organization. Starting in 2000, Kroger management decided to centralized several of their operations including transportation. They recognized a centralized transportation operation would enable:
Greater productivity from their workforce through streamlined and synchronous processes
Provide volume advantages when negotiated carrier contractual rates
Improved inbound visibility with their vendors
Better identification of lanes where Kroger could take over control of vendor-controlled freight where it was economically feasible
Improved private fleet asset utilization for back-haul lanes
Management System
According to research analyst, Georgi E.
Trifonov, Kroger uses a "pull" style of inventory management. According to Trifonov, "The use of a pull system is the obvious choice in the grocery industry where inventory turnover is high and inventory is kept low." Inventory numbers are monitored and when they fall to a certain level the supplier is contacted for restocking.
Sources
-Northern Kentucky University: The Kroger Company: Distriubution and supply chain management analysis for Wegmans and Kroger Co. http://www.nku.edu/~fordmw/memoscm3.pdf -Kroger's Corporate Home on the Web http://www.thekrogerco.com/index.htm -Annual Report Summary of Kroger Co. http://biz.yahoo.com/e/110329/kr10-k.html -Annual Report of Kroger Co. 2006 http://www.docstoc.com/docs/393513/Kroger-Company-2006-Annual-Report -Kroger Case Study
http://onenetwork.com/customers/customer.php?ContentID=81#ixzz1MF3GBsos
Analyzing a Firm
Kroger Co.
Kroger Co. was founded over 125 years ago and is one of the largest retailers in America with over $70 billion in sales for 2008. Kroger operates under various banners, including QuikStop, Fred Meyer, Dillon’s and Kroger Personal Finance. The company has over 323,000 employees. As of early 2008, Kroger Co. operated 2,486 supermarkets and multi-department stores.
Objective
The Kroger Co.'s philanthropic objective is to enhance the quality of life in communities with a concentration of Kroger customers and employees. The Kroger Co. Foundation was created to help the Company meet this goal.
General Guidelines
The Foundation exists for the betterment of the people and communities …show more content…
where The Kroger Co. has operations. Therefore, only organizations that serve the geographic areas where their Company operates are eligible.
Here is a quick summary of eligible grant requests:
. Local United Way campaigns
. Local educational organizations, primarily K-12 schools
. Local hunger relief organizations
. Local breast cancer and women’s health initiatives
. Local organizations that support and promote the advancement of women and minorities
.
Local grassroots community organizations
. Capital campaigns; start up grants; and funding for special projects
Strengths: Kroger Co. has a significant market share in 44 markets covering 31 states. This geographical diversity helps the business sustain its competitive strengths. With a valuable private label business, innovative formats and customer service focus, the company can compete against the likes of Wal-Mart super-centers.
Weaknesses: Kroger Co. operates 42 manufacturing plants including dairies, bakeries, beverage plants, and meat plants. Food manufacturing represents a risk of food contamination. A serious contamination can damage the company's brand and hurt corporate profits.
Opportunities: The expansion of the company in 2007 into the finance market provides a strong future opportunity. The Kroger Personal Finance brand provides convenience to grocery shoppers and can potentially mimic the success of Canada's grocery banking, President's Choice Financial.
Threats: A slowing economy with higher levels of inflation affecting the price of food and greater fuel costs impacting transportation cost, the Kroger Co. can have lower profit margins. Cost conscious consumers will shift their buying habits to less high-end foods and gourmet items (with greater margins) to lower margin food …show more content…
items.
Philosophy
Market share is an important part of their long-term strategy as it best reflects how their products and services resonate with customers. Market share growth allows them to spread the fixed costs in their business over a wider revenue base. Their fundamental operating philosophy is to maintain and increase market share by offering customers good prices and superior products and service. Based on Nielsen Homescan Data, their estimated market share increased in total by approximately 80 basis points in 2010 across the 19 marketing areas outlined by the Nielsen report. This information also indicates that their market share increased in 13 of the marketing areas, declined slightly in four, and remained unchanged in two. Their overall market share grew by approximately 75 basis points in 2010 in 17 of the 19 marketing areas where Wal-Mart supercenters are a primary competitor. Nielsen Homescan Data is generated by customers who self-report their grocery purchases to Nielsen, regardless of retail channel or grocery outlet. This data illustrates that not only are they growing bigger among traditional grocers, they are also gaining ground in the larger retail market for grocery and consumable items, which includes many non-traditional competitors. These market share results are consistent with their long-term strategy.
Structure
De-Centralized Operational Environment created through years of company acquisition.
Through years of growth via acquisition, Kroger's supply chain had become fragmented and de-centralized. This structure did not enable Kroger to take advantage of economies of scale across their organization. Starting in 2000, Kroger management decided to centralized several of their operations including transportation. They recognized a centralized transportation operation would enable:
Greater productivity from their workforce through streamlined and synchronous processes
Provide volume advantages when negotiated carrier contractual rates
Improved inbound visibility with their vendors
Better identification of lanes where Kroger could take over control of vendor-controlled freight where it was economically feasible
Improved private fleet asset utilization for back-haul lanes
Management System
According to research analyst, Georgi E.
Trifonov, Kroger uses a "pull" style of inventory management. According to Trifonov, "The use of a pull system is the obvious choice in the grocery industry where inventory turnover is high and inventory is kept low." Inventory numbers are monitored and when they fall to a certain level the supplier is contacted for restocking.
Sources
-Northern Kentucky University: The Kroger Company: Distriubution and supply chain management analysis for Wegmans and Kroger Co. http://www.nku.edu/~fordmw/memoscm3.pdf -Kroger's Corporate Home on the Web http://www.thekrogerco.com/index.htm -Annual Report Summary of Kroger Co. http://biz.yahoo.com/e/110329/kr10-k.html -Annual Report of Kroger Co. 2006 http://www.docstoc.com/docs/393513/Kroger-Company-2006-Annual-Report -Kroger Case Study
http://onenetwork.com/customers/customer.php?ContentID=81#ixzz1MF3GBsos