Kroger SWOT Analysis

{ Posted on Jan 17 2011 by Chakar Rind | 4,759 views}

Kroger Co., enlisted in NYSE as KR, is an American retailer that also manufactures and processes food items. The company offers products from grocery items to gold and fuel as well as health related medical treatment (minor).

Strengths:

• The firm is renowned as American’s largest grocery store chain in terms of annual sales.

• It is ranked as 23 in Fortune 500 list (2010).

• The company operates about 3,619 food stores (2010).

• It is the 2nd largest grocery retailer in terms of volume.

• It holds the 2nd place general retailer in America, after Wal-Mart.

• It has diversified portfolio regarding its products which come under more than 2 dozens of brand.

• It operates about 40 manufacturing plants.

• It has about 326000 employees.

• The firm has set up fuel pumps near its store locations that regard more convenience for the customers.

• About 87 convenience stores that are operated by franchise agreements.

• The firm uses its own logistics for distribution purposes.

• It has strong and stable market share that is growing.

• The company has partnered with ‘Feeding America’ and ‘The Salvation Army’ for providing free flu shots (2010).

• The firm also stands for support local communities alongside ‘The Salvation Army’.

• Well established regional brands.

• Pricing and quality maintained image in the mind of the consumer.

• Kroger Card Discount, the customer can also avail discounts on its fuel pumps.

• Strong financial position and sturdy establishment comparatively weathered better than the other companies in the Recession.

• The company supports a three-tiered branding approach; private brands compete with the national upscale brands while Kroger value delivers quality at lower price. The banner on the other hand, has labels like King Soopers, Raphs’ and Kroger. This three-tiered approach enables the firm to engage the customers in a wide range demand screen.

Weaknesses:

• Operating expenditure structure is quite high.

• Productivity across the stores are not consistent as well as the execution differs.

• Manufacturing and storage of food products also has a risk of contamination (ConAgra Foods case).

• Understanding the health risks and issuing instructions for certain food types will encourage customer satisfaction (Popcorn Lung case).

• The firm is experiencing decline.

• Recalls due to lesser quality control regarding the vendors are hazardous to health as well as bad for the brand image of the firm.

• Workforce unionization is comparatively poor as it takes a lot of time for drawing negotiable results and formulating agreements accordingly with has negative effect on the bottom line.

• Legal issues for acquiring Ralph’s and Fred Meyer and using illegal hiring practices in these chains.

Opportunities:

•    Expansion into newer markets.

• Leverage synergies.

• Centralize decision making and functions in order to maintain operating and merchandising efficiency.

• Increasing its dependence on private brands.

• Relocation and remodeling of different stores will also be a critical decision for enhancing the performance of the firm, and a larger customer base will be reached.

• Walk-in medical clinics and health assistance in its stores will help in more reliability and loyalty regarding the customers. The clinics will diagnose and treat common illnesses and minor injuries.

• Increasing demand for organic food items.

• Growing demand for private label brands.

• Online sales increasing rapidly due to the technological innovation.

Threats:

• Traditional and non-traditional competitors trending into the competition.

• Gross profit margin pressure that keeps pumping the firm for lower pricing than the competitors.

• Labour unions are dangerous as the firm will face a heavy lose if not negotiate properly in such cases.

• Real Estate maturing.

• Economic downturn.

• Inflation rates affecting food prices and fuel prices that make transportation costly resulting in lower profit margins.

• Cost-conscious consumers shifting buying habits to low-end foods comparably to lower margin food items.

• Increasing labour costs.

• High level debt that was used mostly in restructuring and remodeling new stores.

• Economic projections show depressing results regarding the consumer expenditures.

 

Reference:
http://www.thekrogerco.com/
http://www.managementparadise.com/forums/principles-management-p-o-m/208088-swot-analysis-kroger.html
http://sbinformation.about.com/od/marketresearch/a/swotkroger.htm
http://marketingteacher.com/swot/kroger-swot.html
http://yousigma.com/comparativeanalysis/kroger.html
http://www.americancompanies.com/industry.asp?ID=Grocery%20Chains
http://supermarketnews.com/profiles/top75/
http://www.stores.org/2010/Top-100-Retailers
http://www.fool.com/investing/high-growth/2011/01/14/will-grocery-chains-ever-recover.aspx


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