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Kroger's strategy reset: 6 big changes coming to the grocer

By Clark Howard Staff
By Clark Howard Staff

Times haven’t exactly been kind to Kroger. The pressure of fierce competition from Walmart, Aldi, Lidl and Amazon’s Whole Foods has the nation’s second largest supermarket chain back on its heels.

Here’s a look at changes the veteran grocer is currently putting into effect to right its ship.

RELATED: Amazon is lowering prices at Whole Foods

Kroger’s 2018 comeback strategy

Kroger owns nearly 2,800 stores across two dozen supermarket chains in 35 states and Washington, D.C.

Are you familiar with names like Foods Co., 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 under common ownership, with Kroger as the parent company.

Here’s what going on across the Kroger grocery empire…

Kroger bans Visa at select stores

Beginning August 14, Kroger will no longer accept Visa credit cards at 21 Foods Co. stores and five gas stations in California.

At issue are high swipe fees that Kroger and other retailers have to pay to Visa, which amount to $90 billion annually.

But the battle won’t necessarily end with Foods Co. supermarkets in the Golden State.

“If we have to expand [our ban] beyond Foods Co., we’re prepared to take that step,” Kroger’s executive vice president Chris Hjelm said.

A new D2C e-commerce platform has been launched

Ship is the name of Kroger's new direct-to-consumer e-commerce platform — not to be confused with the grocery-delivery service Shipt that's owned by competitor Target.

(PRNewsfoto/The Kroger Co.)

According to a press release, Kroger Ship customers can shop from a curated selection of 4,500 'Our Brands' products not available elsewhere online and more than 50,000 center-aisle groceries and household essentials.

The service offers competitive e-commerce pricing and fast and free doorstep delivery on orders over $35. But if you don’t meet that $35 order threshold, shipping will be $4.99 per order.

Kroger Ship is only available in Cincinnati, Houston, Louisville, and Nashville at this time, but additional markets will be added over the next few months.

Kroger is going on a yearlong hiring spree

After creating a combined 22,000 new jobs over the past two years, Kroger isn’t stopping anytime soon!

This year, the goal is to add 11,000 jobs to the payroll in 2018. Some 2,000 of those jobs will be management positions, according to a recent press release.

Associates in and around Kroger's hometown of Cincinnati now start at a minimum of $10/hour with the possibility for a raise to $11/hour after 12 months on the job.

Turkey Hill Dairy could go up on the auction block

Your favorite brand of ice cream could soon be cut from the Kroger portfolio of products!

That's because the supermarket chain has hired the investment bankers at Goldman Sachs to explore a possible sale of its Turkey Hill Dairy business.

Dreamstime

“Turkey Hill’s products have the potential for greater growth outside of our company,” Erin Sharp, group vice president for Kroger Manufacturing, said in a news release.

In addition to ice cream, Turkey Hill also makes iced tea, fruit drinks and other beverages.

The sale of Kroger’s convenience store business is completed

Just two months after first announcing this deal, Kroger completed the $2.15 billion sales of its C-store business to European operator EG Group.

The deal, which closed in April 2018, included 762 convenience stores across 18 states. The C-stores operated under a variety of names, including the Turkey Hill, Loaf ‘N Jug, Kwik Shop, Tom Thumb and Quik Stop.

Kroger will reportedly use the proceeds from the sale for debt reduction and to repurchase its own shares in the stock market.

Kroger is pulling out of one major market completely

The supermarket chain has had to wave the white flag of surrender in the Raleigh-Durham area of North Carolina because of too much competition!

According to the latest reports, all remaining Kroger stores will close August 11.

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