Kroger Goes Cheap

The Lempert Report
September 21, 2022

Phil: So, Kroger has decided to announce a new private label. Tell us about that.

Sally: Well, Phil, you know, that Kroger has already had 17 private label lines. The simple truth home chef private selection, these are very popular, but now they're sort of changing things up and they're focusing on this new private label brand called Smart Way. This is a budget friendly label. They're gonna use orange and white brightly colored signage so that you can see it in the store. And, this is supposed to signal to consumers that this is a great deal, this product.

Phil: So what, what concerns me about this, and I love Kroger's simple truth. For example, I love, you know, 99% of all Kroger private labels. So let me start there when I look at Smart Way and I really have not tasted it. I have not seen it. I have not looked at the ingredients of it, but what has me concerned, this really reminds me of what happened in the seventies and eighties, where we went to those generic black and white labeled products and those products quality was down. We've gotta understand that for Kroger to say, "okay, we're gonna have Smart Way, which is less expensive". Something's gotta give, and it's not Kroger's margin because that's razor thin, but I'm concerned about the quality. So I've gotta get into a couple Krogers. They just announced that they're gonna have 150 different products right now.

Phil: They've got well priced, canned goods, jarred pickles, dish soap, breads napkins. Those are the only ones that they're talking about, but I've gotta check it out. So just hold on that until we can actually look at the product to be able to determine whether or not it's gonna be a hit or whether or not it's gonna be a miss because yes, people want less expensive foods, but I don't know if people are willing to give up any quality as a result of that. Also, you know, SmartWay is saying that 41% of shoppers are buying more store brands than they did before the pandemic and 77% see they will continue to purchase store brands in the future. Those are huge numbers. And to be honest with you, it's a great opportunity for not only Kroger, but every retailer to really build up their store brands. That's the great news, but you've gotta have the quality there to maintain that.