Our Kroger SWOT Analysis investigates the Strengths, Weaknesses, Opportunities, and Threats of the retail US company that started as a simple grocery store.
Listen, guys! What's your go-to place for groceries? Are you thinking what I am thinking? Well, only one name comes to our mind when we think about groceries, and that's Kroger.
While driving, walking, and jogging, I'm sure all of you guys have seen the gigantic building of Kroger. Due to its size and beautiful design, it is not possible that one can pass by Kroger without noticing it.
Kroger is a retail company that has thousands of multi-department stores and supermarkets across the US. In 2021, Kroger had 2,726 supermarkets spread over 35 states of the US. Besides the supermarkets, it also owns several jewelry stores, multi-department stores, supermarket fuel centers, and pharmacies.
After looking at the popularity and geographical presence of Kroger in the US, we have decided to conduct a Kroger SWOT Analysis.
Before we proceed further to carry out the SWOT analysis, let's have a look at Kroger's exciting history.
The roots of Kroger are traced way back to 1883 when a child of a German immigrant named Barney Kroger invested his life savings in opening a grocery store. Soon after opening the first grocery store, Kroger continued to expand.
Barney Kroger always had an innovative mind. In the 1900s, instead of buying the bread from the local bakeries and selling it, Kroger thought of baking it himself. The money saved from cutting the bread expenses was invested in offering fresh loaves to the customers.
Such an intelligent business-minded approach helped Kroger spread its operations across the US. Starting from a small town of Cincinnati, Kroger is now available in 35 states of the US.
From there onwards, Kroger never stopped the expansion of its stores, and now every resident of the US is familiar with Kroger. Currently, Kroger is one of the largest supermarket chains in terms of revenue.
In 2022, Kroger managed to generate revenue of $137.89 billion. Such a huge revenue makes it a big retailing company. In 139 years, Kroger, which was once a small grocery store run by a single person, now provides employment to 420,000 employees.
Since now you know the history and the current status of Kroger, let's move further and conduct a Kroger SWOT analysis. But before we proceed a step further, let me tell you what SWOT analysis is and why it is used.
SWOT analysis is a tool used for business analysis. It highlights the internal and external factors affecting an organization's growth and performance.
In this article, Kroger's SWOT template will highlight some of the strengths, weaknesses, opportunities, and threats that Kroger faces while competing in the market.
Okay, it may seem confusing at this stage, but trust me, it's very simple. If you're a bit confused and need some clarity, take a look at some of the examples of SWOT Analysis.
So without further delay, let's get to the real business.
Kroger Strengths
Strengths are the positive qualities or characteristics that a company has. These strengths provide a firm foundation to the organization and help it grow and survive in a cut-throat competitive market.
Kroger is considered one of the leading companies in the grocery industry. This section will highlight some of the strengths that helped Kroger dominate the grocery industry.
Strong Presence In the US
For any business that wants to become big, it is essential to have a strong geographical presence. For example, Kroger, which initially started off with a single grocery store, now has nearly 2,800 stores in 35 states of the US.
Such a solid geographical presence of Kroger in the country helps it increase its sales. As a result, high revenues are generated.
Diversification in Stores and Products
Kroger owns four types of stores across the US.; multi-department stores, supermarkets, marketplace stores, and price-impact warehouse stores. Kroger uses a variety of store formats to appeal to different consumer tastes and purchasing abilities.
Kroger offers a full range of products and services in all store formats. Its strength is marketing different types of products in various forms to appeal to as many customers as possible. This strength has been vital to Kroger's growth and stability. On the contrary, its competitors have struggled with a focus on only one type of customer or product category.
Customer's Trust
Kroger provides customers with a safe and secure environment while shopping. The blue color in its logo reflects integrity, honesty, and the human soul's warmth before money. This helps in developing customers' trust. As a result, they visit Kroger again and again. Recently, Kroger was ranked 2nd in customer loyalty and trust.
Kroger provides the best quality and fresh products. This forms a better image of the company in the head of its customers. Moreover, Kroger's brand "Simple Truth" also plays a vital part in making people trust Kroger and its products.
Kroger Weaknesses
In the previous section, we discussed the strengths of Kroger, But along with strengths, weaknesses should also be addressed. So, In this section, we will highlight some of the weaknesses of Kroger.
Let's find out what are these weaknesses that Kroger possesses. Kroger can work on these weaknesses and convert them into their strengths.
Controversies
Despite having thousands of loyal customers in every state of the US, Kroger has still been a part of several controversies. Over the years, where Kroger managed to develop a relationship of trust between the grocery chain and the customers, recently, the supermarket chain was found guilty of violating child labor laws.
Other than that, a lawsuit was filed against Kroger recently by an ex-employee who was fired by Kroger after she heroically stopped an attempt of shoplifting from the store. All these controversies have damaged the reputation of Kroger, and this bad publicity may result in a decrease in the number of sales.
No International Presence
Kroger is the largest department store chain in the US in terms of the number of stores. However, these stores are only distributed in 35 states. Moreover, Kroger isn't a company that is expanding internationally, unlike its major competitor, Walmart.
Geographical diversity allows a firm to balance out bad performance from a region with another less afflicted area. These limited operations act as a weakness that hinders Kroger's ability to survive economic crises in the US economy.
High Operating Expenses
High operating expenses lead to thin profit margins; as a result, less money is left to re-invest within the business, and the growth of an organization is hindered.
Kroger has high operating expenses. In 2022, Kroger spent $134.441 billion paying its expenses. The supermarket chain employs around half a million employees. Due to such a high number of employees, a lot of money is spent on employees' wages, which leads to a reduction in profits.
Kroger Opportunities
Opportunities can be defined as anything that helps a business grow, whether it's a current opportunity or something to look forward to in the future. So the letter O in the word "SWOT" stands for the opportunities that lie ahead of an organization.
This section will highlight some of the opportunities that give Kroger a chance to attain growth.
Increasing Demand for Organic Food
Over the years, we have seen a rise in the demand for organic food. Recently it was recorded that nearly 13% of sales for organic food increased in the US. Looking at the pandemic and awareness of fitness in society, we can predict that organic food consumption will increase in the future.
Kroger can exploit this opportunity by offering more organic food brands similar to Simple Truth. By doing so, Kroger can increase its sales and enjoy high profits in the future.
Expansions
In the previous section, we discussed how Kroger's international absence and limited expansion within the US are its weakness. However, this weakness can also be considered an opportunity for Kroger.
Kroger can expand its operations to all 50 states of the US, and it can further plan to move its operations abroad. This expansion will increase the customer base of Kroger and will help in generating high revenues.
Use of Technology
With the rise of technology, it has become necessary for businesses to adopt new technologies to gain an edge over their competitors. Kroger also has the opportunity to use new technology in its favor.
Kroger is currently using data analytics to improve customer experience and increase the efficiency of its operations. Such technology can benefit Kroger by increasing its sales and minimizing expenses.
Kroger Threats
Threats are the external factors that adversely affect an organization's performance. If appropriate measures are not taken to counter these threats, an organization can experience severe losses in the future.
In this section, we will discuss the threats that Kroger faces.
Upcoming Recession
The world economy suffered a significant blow after the pandemic. Inflation rose worldwide as the demand began to exceed the supply. The Russian-Ukraine conflict during this period also led to more economic problems, with an added blow to inflation as trading activities with that region ended.
This caused severe economic impacts, and it is predicted that a global recession will occur soon. A global recession would be devastating for Kroger since it would decrease the average household consumption; as a result, Kroger's sales would decline.
High Competition
Kroger has been a part of the retail industry for 139 years. Despite cut-throat competition in this industry due to similar products, Kroger managed to earn a name for itself.
However, Kroger is now all set to face high competition in all aspects of its value proposition and strategy. Recently, Kroger's major competitor, Walmart, has started a private label named Great Value to compete with Kroger's Simple Truth. To maintain a high position in the market, Kroger needs to deal with this competition.
E-Commerce Stores
Kroger's revenue may be impacted when online stores such as Amazon expand their food offerings. Traditional online retailers such as Amazon have also grown towards the online grocery business.
This acts as a threat to Kroger's e-commerce activities since Amazon already has an established customer base. In the near future, Amazon can divert Kroger's customers. This will cause a fall in the revenue for Kroger, and its profit will be squeezed.
Kroger SWOT Analysis: Final Thoughts
So, guys, We have finally reached the end of this article. We assume that you've gained a lot from reading it and you've really enjoyed it.
Before wrapping it up, let's summarise what we discussed throughout. So initially, we started off by providing you a little bit of the background of Kroger. Then, we got to know an inspiring story of an Immigrant's son. Who invested his entire savings in opening a grocery store.
Then we discussed how he managed to expand his business across 35 states of the US with nearly 3000 stores. After that, we discussed the current position of Krogers. It was pretty interesting to know how a store once run by a single person now employs almost half a million workers.
After getting done with that, we moved to the SWOT analysis of Kroger. We carried out Kroger's SWOT analysis to see the internal and external factors affecting the operations of Kroger.
Through the SWOT analysis, we learned the strengths, weaknesses, opportunities, and weaknesses that Kroger possesses.
We carried out this SWOT analysis in the form of an article so that we can explain each factor affecting Kroger to you in detail. However, the findings of this SWOT analysis can also be represented through a SWOT Matrix.
A SWOT Matrix is a more efficient and less complicated way to represent the findings of a SWOT analysis. In the end, we assume that this article helped you understand the internal and external factors that affect Kroger. We also believe that this article has provided you with a little know-how about how to conduct a SWOT analysis.
