Shownotes
Kroger unveils its "deli of the future" in a new Kentucky marketplace store, sponsored by the A&M Consumer and Retail Group, Mirakl, Ocampo Capital, Infios, and Quorso.
The 6,500 square foot prepared food section features open kitchens, made-to-order sandwiches, and premium offerings like Murray's cheese and Snow Fox sushi. Anne sees potential for additional trip occasions, while Chris questions whether this innovation addresses Kroger's real challenges with their existing store base.
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Transcripts
Kroger is set to roll out its quote deli of the future in its new Kentucky store.
Speaker A:According to grocery dive, the 6,500 square foot prepared food section will anchor a Kroger marketplace store in Edgewood, Kentucky that will replace an existing store and also feature a gas station, apparel department and liquor shop.
Speaker A:The open kitchen deli concept, which Kroger said is quote inspired by restaurants and the classic neighborhood deli, end quote, will offer made to order sandwiches built around house roasted meals and homestyle sides.
Speaker A:It will also feature Murray's cheese station and private selection by Snow Fox Sushi.
Speaker A:I know, and you're a big fan of Snow Fox Sushi.
Speaker A:And this might be my favorite question I've ever asked you in the history of the show.
Speaker A:Do you think Kroger's deli of the future will cure what ails Kroger or do you think it is just another example of innovation induced botulism?
Speaker B:Oh, I mean, look, I like this.
Speaker B:I think, I don't, I don't know that here.
Speaker B:I don't know that curing what ails Kroger is as far as I would go.
Speaker B:But I mean, I'm all for a deli update because I think for a couple of reasons.
Speaker B:One, I think it gives people another reason to go to Kroger to make an additional trip to Kroger for grab and go food and then they're getting other items that they might want while they're at the store.
Speaker B:Like, I feel like that is a, as a valuable use case for their consumers and for the future of Kroger.
Speaker B:Second, I think that if you think about the, the extension of this, not only does it allow for another trip type, but it also allows for another add on to a basket potentially down the road for any of their grocery delivery.
Speaker B:So do you want, you know, ready to eat sandwiches delivered with your groceries at 5 o'?
Speaker B:Clock?
Speaker B:Obviously some logistics that go into that, but my hope is that that's part of the consideration here as they're thinking about how to better serve their Kroger consumers.
Speaker B:But I mean, you look at some other major grocers that are investing in this ready to eat food.
Speaker B:You look at Walmart, H e B Schnooks, like everybody's doubling down on this as an, as an option for their consumers.
Speaker B:So I don't think it's a bad decision.
Speaker B:I think it's something that that Kroger needs to do.
Speaker B:I just draw the line at one thing, Chris.
Speaker A:What?
Speaker B:Open, open kitchens.
Speaker B:That is something that I would have skipped in this rollout because this is not Nobu sushi.
Speaker B:I do not need to see my chub getting sliced for my sandwich.
Speaker B:I.
Speaker B:That is not something I need to witness the open kitchens part.
Speaker B:I would not make that investment because that's a pretty significant investment, I think, here in this remodel.
Speaker B:And I would not.
Speaker B:I would, I would not be.
Speaker B:Be pro open kitchen.
Speaker B:But those are, those are my thoughts.
Speaker B:Chris, I have a feeling you're going to be going in another direction here, so let's have that idea.
Speaker A:And, and I didn't know you like an opaque kitchen.
Speaker A:That's good to know.
Speaker B:No, I do not.
Speaker B:I do not want the.
Speaker B:The opaque or anything.
Speaker B:I just don't want to see the kitchen.
Speaker B:I don't need any.
Speaker B:None of that.
Speaker B:Not for meat slicing.
Speaker B:Not necessary.
Speaker A:All right.
Speaker A:Okay.
Speaker A:For me, it's lazy.
Speaker A:Okay.
Speaker A:I mean, first of all, I take issue with the headline, this deli of the future.
Speaker A:I mean, it's just a bigger deli.
Speaker A:Like, come on.
Speaker A:Like, it's just a bigger deli.
Speaker A:Like, let's, let's be honest here.
Speaker A:Let's be real.
Speaker A:But the reason I don't like this story, and I don't think there's anything wrong.
Speaker A:I agree with you.
Speaker A:I don't think there's anything inherently wrong with putting a bigger deli in a new store.
Speaker A:But this, this story is what particularly drives me crazy about the grocery industry.
Speaker A:Because it's a new store.
Speaker A:Like, so what you're doing it a new store.
Speaker A:But how many new stores are you going to build reliably in this way that are going to make a difference for you in the long run?
Speaker A:So what do you really.
Speaker A:My question is, is it isn't the time and effort, instead of spinning out how this is, like in the media, the deli of the future, Isn't the time and effort better spent on figuring out how you're going to retrofit your existing store base that has been around for decades and is saddled with so much architectural and technical debt that to me is the real question Kroger has to solve.
Speaker A:And is it in the deli or is it in other places?
Speaker A:I don't know.
Speaker A:But the deli of the future, this isn't going to move anything forward outside of Edgewood, Kentucky, given the size of it in comparison to the footprint of what an average Kroger grocery store is and an average Kroger grocery store experiences throughout the rest of the country.
Speaker A:That's my take.
Speaker A:What do you think?
Speaker B:So, so are you saying, so you're saying you just don't want independent.
Speaker B:Like you're okay with the remodels of the delis in general to take up more footprint in Kroger, but you're not okay with this particular deli of the future concept.
Speaker A:I just, I just don't like that you're trying to spin it as you being innovative and creative.
Speaker A:And it's just, you're just building a new store.
Speaker A:Basically, you're formatting the store differently.
Speaker A:And what I want to, the connection that I want to hear about palpably is how are you taking that and expecting or trying to put that back into your overall operation.
Speaker A:And that's where I think there's going to be a major disconnect on Kroger's part here over the long run.
Speaker A:Like, yeah, they might put this thing in here, but it's just going to be an Edgewood, Kentucky, and it's never going to go anywhere else.
Speaker A:And that's the problem I fundamentally have with it.
Speaker A:I feel like I.
Speaker A:It's not investing in innovation to the degree that it needs to be.
Speaker B:I.
Speaker B:One question that I have, or 1 thought I'll leave the listeners with here is as we've been hearing, much more of a focus on higher protein diets, on fresher food, on people caring about that and seeking those types of products out in a grocery store environment.
Speaker B:Will this actually be innovative because they're dedicating more footprint in the store to those products that people are going to be consuming more of as their needs change, as they, as more people are using GLP1s.
Speaker B:That's the only thing that I would say is there innovation in that because the footprint of the store is changing.
Speaker B:Is it again, square feet don't.
Speaker A:Maybe again, but you still have to retrofit the entire operation for that.
Speaker A:So to your point, if that's where you want to go, I think the more efficient experimentation is laying the store out for all of the categories from a proportional perspective in terms of where you want to bet.
Speaker A:Going back to A and M conversation we had about categorically how do you want to position your bets across the store and trying to understand that best you can.
Speaker A:But that's still tricky because you're opening it today, you're not opening it for tomorrow.
Speaker A:And so, yeah, so I don't, I still don't think that's a convincing way to go about this either.
Speaker A:You know.
Speaker A:Yeah, that doesn't, that doesn't hook me.
Speaker A:But I don't know, what about open.
Speaker B:Kitchens what's your vote on that?
Speaker A:I like.
Speaker A:I like a semi transparent kitchen and, you know, maybe like, some, like, 70s love beads.
Speaker A:Like, 60s love beads hanging down between me.
Speaker B:I don't think that's.
Speaker A:I don't get the ideal.
Speaker B:That's not certified.
Speaker B:No.
Speaker B:NSF certification is not okay with 70s love beads being dropped from the ceiling.
Speaker A:Large flames going up in front of you all day long.
Speaker B:Just okay.
Speaker B:Okay.
Speaker A:Barbecue flame, rise.
Speaker A:And that's okay.
Speaker B:All right.
Speaker B:Thank you for solving that for the listeners.