Kroger appears to be poised to sell its convenience store chains in order to put more focus on its grocery business. The C-stores are a high margin part of Kroger’s sales, but Kroger indicates it wants to put more emphasis on online sales. Heather Haddon reports:
Selling the convenience stores could deprive Kroger of one means for reaching its goal to capture more of the roughly $1.5 trillion spent in the U.S. each year on food and consumables. The stores generated $4 billion in revenue last year and have delivered more than five years of identical store sales growth.
Convenience stores and other nontraditional retail outlets are one place consumers are buying more food instead of traditional grocery stores and, thanks in part to fuel sales and lower operating costs, convenience stores tend to have higher profit margins than traditional grocery stores.
But Kroger and other food retailers are cutting costs swiftly and abandoning plans to build new stores to invest instead on e-commerce offerings and other technologies. The company said Wednesday that it would roll out a system that allows customers to ring up their own groceries through a wireless hand-held scanner to 400 stores by next year, up from 20 today.
“We need to move faster on digital,” Mr. McMullen said.
Executives also said that, under a program dubbed “Restock Kroger,” they will seek to sell more advertising, generate new income from a data-analytics division, rethink how to restock shelves and continue to cut prices on some items to avoid losing customers. They said the effort will generate $400 million in profit by 2020, and that broader cost-cutting is expected to free up more than $4 billion in cash over the next three years.
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