Categories: SWOT Analysis

Kroger (NYSE: KR) SWOT Analysis

Kroger, the country largest grocery chain is publicly owned and involves retails of wine, bakery, beer, dairy, banking, gasoline, frozen foods, deli, liquor, pharmacy, merchandise, produce and sea foods. The company now based in Cincinnati, Ohio, United States was originated in 1883 by Bernard Kroger. The stores chains are purely American based with mostly inter American products.

Strengths

• The company is successfully providing its services in more than 31 states having 3,619 direct or subsidiary stores.

• Being privately labeled the company has special emphasis on its customer care department to add up the good will of customers nod to ensure maximum sales in a sustainable way.

• The company has maximum share holders as compared to all the competitors in 35 states. Overall company position remained at number one or number two in successive years.

• The company’s main advantage over the others is its brand equity. It is amongst the 20 top most reputable companies

• The company has a unique branding approach including banner brands, Kroger value and private selection. With the help of this three tiers approach the company enables the provision of its services to maximum group of customers.

• Almost 43 % of private labeled products of the company are being manufactured in their own 42 manufacturing units like diary processing, bakery products, cheese plants, meat processing units, beverages plant and several grocery product plant to ensure the efficiency of manufacture and store distribution.

• The services provided by the company are very diverse and visiting such versatile store saves their ample time and money as well, so it’s considered economical as well.

• The fuel station present at minimum distances and the financial services are proving to their diversification strategy.

• Approx. 338,000 employees are offering their services to the company and making it a success story.

• The company franchises for convenience stores covers more than 87 stores across different states.

• The recession, to which most of the companies have fallen victim to; has coped smartly by Kroger because of its strong financial position.

Weaknesses

• The corporate profit of the company can easily be threatened, if any of the forty manufacturing plant, especially that of milk and cheese gets contaminated. As such sensitive operations are very difficult to be maintained hygienically.

• The quality control lapse harmed the brand’s name and customer confidence on privately owned products was considerably lost.

• The company labor often puts it at competitive disadvantage because of its unionized status as compared to its competitors, which enjoy lower operating as well as labor cost.

• The company has been facing substantial financial impacts through the legal issues that had been faced and some still active for past few years.

• Operational cost of the company is very high because of its manufacturing units.

Opportunities

• The financial brand of the company that has led it to enter into financial markets has marked the success of its grocery business.

• More than 14,000 of the Kroger brands and the promotional activities of private brands instead of national brands has changed the financial pace and security of the company.

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• The expansion plan of the company is successfully running with maximum locations for outlets with a mission of reduction of operation cost by introducing the cost effective strategies.

• The company has a unique involvement of walk in clinics at its stores for providing the consumers health assistance; this also leads the company towards the formation of user friendly products. Kroger partnership with little clinic has made it possible to hire certified physicians and nurses.

• Online orders placement has increased considerably through technological innovations.

Threats

• Increasing transportation costs and inflation rates has made the company to lower the marginal profits.

• The labor cost has successively been increasing because of sudden inflation throughout the world. Labor has been dominating the company’s performance and is liable for increased operational cost.[linkunit]

• The debt of the company rising to almost $8 billion is again a sizeable threat.

• The incomparable strategies of competitors place them at a risky position as cost conscious customers are moving towards Wal-Mart discount rates and great diversity.