Cliff Brown says he enjoys his job as senior director of construction for Kroger for at least four reasons: “It’s taxing, challenging, and has stringent requirements. And it’s energizing.”
He clearly understands his responsibilities given everything that has happened, is happening, and will happen soon in grocery retail. Creating the physical environment for supermarkets has always had its complexities. But with shifting consumer interests, the competing prepared meal kit category, and—in 2020—the rush to online groceries to combat a pandemic, traditional food merchandizing has had to make countless adaptations.
Supermarkets might be an old-line industry, yet it’s hard to imagine another business with so many moving pieces that affect everyone with an appetite—virtually the entire population. Kroger spends about a billion dollars a year in store and distribution center construction and renovations. The Cincinnati-based retailer has 2,750 retail stores (about 180 million square feet), 25 distribution centers, and about 257 construction-related staff. Brown directly oversees about half of the crew and operation.
But for the 31 differently branded brick-and-mortar stores in the Kroger family, it’s the unseen distribution centers that are growing in importance. Leading trade publication Supermarket News notes that online food shopping will reach 21.5 percent of the total market by 2025; by the end of 2020, it was only at 10.2 percent. Trade experts predict rapid growth as a result of changed habits from the pandemic will combine with overall trends toward e-commerce in grocery.
“Our culture is that we don’t ‘Krogerize’ [our acquired brand]. We help them eliminate inefficiencies, but we also remain open to outsiders.”
Brown explains that this doesn’t mean professional shoppers working for third party companies will be hoarding the aisles, sometimes snatching that last roll of toilet paper from the shelf before a regular consumer can. “We understand how that affects our regular customers,” he says, “which is why are investing in direct-to-consumer capability.” That entails item-picking-and-packing robotic facilities, far removed from commercial shopping districts, which the company is developing in partnership with Ocado Technology, a UK-based online-only supermarket. Kroger is investing a half-billion dollars in seven such buildings near key markets.
This should not suggest, however, that the shopping experience, as well as how the stores are managed, will become some standardized experience, indistinguishable from California to Maine. While Kroger is the country’s largest supermarket store by revenue (about $121 billion in annual sales), it owns a number of well-known brands such as Dillons, Mariano’s, Ralph’s, Fred Meyer, QFC, and more.
Each of the acquired companies in the Kroger family had their own business cultures and ways of doing business. The brand names stick in markets where they are well established and carry value. “Our culture is that we don’t ‘Krogerize’ them,” Brown says. “We help them eliminate inefficiencies, but we also remain open to each banner’s unique offerings.”
One prominent feature in the physical environment of the stores begins with a marketing promise: “Fresh for Everyone.” It is manifested in the store entryways, vestibules that are modern, clean, and built for easy and regular maintenance. Beyond just separating the outside from the inside, it’s a place for merchandising produce and other products where consumers enter. It’s not unlike the concept of curb appeal that realtors use to sell homes, which focus on first impressions.
Continuing on into the stores, consumers might notice less variation in temperatures between aisles. This is because refrigerated sections have been outfitted with glass doors. Brown says they installed 33,000 such doors in stores where shelves were previously pumping out cold air over yogurts, cheeses, eggs, and similar products onto shoppers. “This change alone reduced the electrical load for those aisles by 90 percent,” he says.
“In the 1990s we could take years to figure out how to sell sushi. Now we have just weeks to sometimes serve trends that might only last months.”
Sustainability features are now standard as the company revamps and revitalizes existing properties. The construction team achieved zero waste in 54 percent of new store and remodel projects in 2019, a diversion of 68,000 tons of construction waste from landfills.
The impact of the pandemic might establish longer-term shopping habits favorable to the grocery category, well beyond a face mask mandate for in-store shoppers. “The shutdown of restaurants, and lower employment numbers, means that more people are stretching their household dollars by doing the cooking themselves in their own kitchens,” Brown acknowledges. “Younger shoppers still like to grab a pre-made meal out of the case, so we have to build for that too.”
The shifting culture illustrates the need for the grocery behemoth, in brick-and-mortar and via e-commerce channels, to adapt quickly to best serve the communities that rely on the brand. “In the 1990s one might take years to figure out how to sell sushi,” the construction director says. “Now we have just weeks to sometimes serve trends that might only last months.”
Taxing, challenging, stringent, and energizing indeed.