NEW YORK -- Supermarket retailer The Kroger Co., which also operates nearly 800 convenience stores under several flags in 18 states, is looking at opening more and larger c-stores that feature a "fresh presentation," offering "some fresh meat, fresh produce, a little bit more in the deli than just the hotdogs on the warmer--they'd have a little bit more of an array [of what] we have in the [supermarket] deli," Mike Schlotman, senior vice president and CFO of Kroger, said at the recent BMO Capital Markets 2012 Farm to Market investors conference in New York City.
"We wouldn't be opposed to adding to our convenience store portfolio so long as the stores are in our existing supermarket geography. We like the feel and opportunity of having some of those convenience stores fill in parts of the cities where it may not be big enough to build a full line supermarket," he said.
Providing some background on the retailer's c-store strategy, he said, "In Wichita, Kansas, where forever we've had supermarkets and convenience stores, for years we operated them as silos. About three or four years ago, we started operating them together."
These stores are "now doing perishable product--fresh product, I'm sorry, we're not supposed to say perishable--fresh product in the convenience stores now, and we price that milk and bread and that kind of product at the supermarket prices. Now not everything is supermarket prices, but those three or four important categories are supermarket prices," he said.
"So now if you shop at [Kroger c-store chains] Quick Shop or Dillon's, you earn fuel rewards, you can redeem that fuel reward at the convenience store or you can redeem that fuel reward at the grocery store, whichever one is most convenient to you. And it's really an attempt to ... try to address some of that smaller-footprint convenience kind of shop activity that some [other] formats are gleaning from us, and with the convenience stores we feel that's an opportunity."
He added, "We've actually built a few convenience stores, net new convenience stores, in a couple of traditional Kroger program markets to see if we can replicate what's happening in Wichita from the ground up. It's a little early at this point. We don't have the number we actually need to call it a full test, but we think there's something there."
BMO Capital Markets is the investment and corporate banking arm of BMO Financial Group. The two-day Farm to Market Conference brought together senior executives from leading agriculture, fertilizer and food retail companies, providing an in-depth look at each sector and a global perspective on the challenges and opportunities ahead for related industries.
Cincinnati, Ohio-based Kroger operates 2,435 supermarkets in 31 states under two-dozen local banners. Kroger also operates more than 1,090 supermarket fuel centers and 791 c-stores in 18 states: Pueblo, Colo.-based Loaf 'N Jug in Colorado, New Mexico, Nebraska, Montana, North Dakota, Oklahoma, South Dakota and Wyoming; Lancaster, Pa.-based Turkey Hill Minit Markets in Pennsylvania; Crestview, Fla.-based Tom Thumb Food Stores in Florida and Alabama; Kwik Shop in Illinois, Iowa, Kansas and Nebraska; Fremont Calif.-based Quik Stop Markets in California and Nevada, and Salt Lake City-based Smith's Express in Utah.
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