Kroger Co.’s 12.75-year streak of positive comps ended in the fourth quarter of 2016, with the retailer reporting a -.7% decrease in same store sales on March 2.
The Cincinnati-based retailer said food price deflation was the biggest factor in the quarter’s negative comps. When adjusted for inflation, same store sales actually grew, said chief financial officer Mike Schlotman, during the quarterly earnings call. Schlotman said deflation, excluding fuel, was 1.3% in the fourth quarter, compared to 1.1% in the third quarter.
Kroger’s CEO Rodney McMullen highlighted the company’s investments in digital, including ClickList grocery pickup, and Uber-based delivery.
“We feel great about these investments, because customers tell us they are important to them,” he said. The company now operates more than 640 ClickList and express lane locations.
“This effort was based on learnings from our merger with Harris Teeter,” he said. “We are also experimenting with ways to solve the last mile equation. We’re testing Uber delivery in several locations, with plans to expand in 2017.”
McMullen said the company likely will open fewer ClickList locations in 2017.
“But it’s not driven by the enthusiasm for ClickList,” he said. “It’s driven by finding stores with the space in it, and incorporating it and getting zoning changes, an anything else we need to do. One of the big things – probably the biggest learning that it’s been at least a surprise for me…is customers continue to shop inside the store, even when they become a ClickList customer, and they’ll buy certain products via ClickList, but they still come into the store.”
Kroger’s own brand Simple Truth was a major highlight in 2016, with total sales of $1.7 billion compared to $1 billion in 2015. Total corporate brand sales accounted for 29.2% of Kroger’s sales in 2016, he said.