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Kroger’s strategy reset: 5 big changes coming to the grocer

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Theo Thimou, Clark.com

The year 2017 hasn’t exactly been kind to Kroger. The pressure of some fierce competition (read: Amazon and Lidl) in the market has the veteran grocer back on its heels.

Here’s what the company is doing to fight back!

RELATED: Amazon is lowering prices at Whole Foods

Introducing the Restock Kroger plan

Kroger has long been the nation’s second largest grocer behind Walmart. Today it operates 2,793 retail food stores under a variety of different names in 35 states and Washington, D.C.

Maybe you’re familiar with grocery stores like Ralphs, Dillons, Smith’s, King Soopers, Fry’s, QFC, City Market, Owen’s, Jay C, Pay Less, Baker’s, Gerbes, Harris Teeter, Pick N’ Save, Copps, Metro Market or Mariano’s. They’re all part of Kroger’s grocery empire!

But after a year that’s seen the entire grocery sector shaken up by Amazon’s purchase of Whole Foods, the value of Kroger stock has plummeted by 45% to trade at a four-year low.

And though the company may be down, it’s definitely not out.

Kroger recently announced a strategy overhaul called “Restock Kroger” that will be driven by capital investments, technology upgrades and a renewed commitment to employees.

Here are some key strategies Kroger wants to use to right its ship in 2018…

Private label clothing is coming in 2018

Some 300 Fred Meyer and Kroger Marketplace stores will be the first to get a taste of a Kroger private label clothing line in the new year and beyond.

On tap for the racks will be activewear that’s “modern,” “playful” and “simple,” along with other offerings for children, young men, juniors, men and women.

“This new [apparel] brand gives Kroger a chance to inspire and connect with our customers, offering effortless style every day — from elevated basics to fashionable highlights,” Robert Clark, Kroger’s senior vice president of merchandising, said in a statement.

“This new offering is on-trend, convenient, and right in line with our customers’ needs.”

Checkout times will be reduced by six seconds on average

The front-end of your local Kroger will be evolving right before your eyes.

The Scan, Bag, Go pilot that popped up in 20 stores in 2017 — mostly clustered in Kroger’s hometown of Cincinnati — will be expanded to 400 stores in 2018.

This technology lets you use a wireless hand-held device to scan items and bag them yourself as you’re going through the aisles. When you’re done, all it takes is a quick stop at checkout to settle up your bill and you’re out the door.

But that’s not all!

The company is focused on new enhancements involving chip-enabled card and point of sale (POS) tech that it say will save you up to six seconds in the checkout line.

Kroger will invest more in its employees

For any customer-facing business, your store associates are where the rubber meets the road — and Kroger is no exception.

The company plans to invest $500 million in its employees over the next three years with more training for advance certifications, better performance incentives and other initiatives.

In corporate press release speak, that amounts to “accelerating [Kroger’s] high-performance leadership culture through future talent development, training, and a rebalancing of pay and benefits.”

Kroger’s C-store business could be sold off

Kroger owns and operates 784 convenience stores located across 18 states. That includes 68 franchise operations.

The convenience stores operate under a variety of name — Turkey Hill Minit Markets, Loaf ‘N Jug, KwikShop, Tom Thumb and QuickStop — and collectively employ 11,000 associates.

But it turns out those stores could be worth more outside of the company than inside its portfolio.

“Our convenience stores are strong, successful and growing with the potential to grow even more,” Mike Schlotman, Kroger’s executive vice president and CFO, said in a press release.

“We want to look at all options to ensure this part of the business is meeting its full potential. Considering the current premium multiples for convenience stores, we feel it is our obligation as a management team to undertake this review.”

Announcing the Zero Hunger | Zero Waste Plan

The new Kroger Restock plan isn’t all about boosting value for shareholders.

Kroger’s long-time philanthropic heart is on display in the Zero Hunger | Zero Waste Plan, which launched in September.

The aims of the new initiative are twofold: To eradicate hunger in the communities where Kroger does business and to eliminate waste in the company by 2025.

RELATED: 4 things to know about shopping Dollar General for the holidays

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