SWOT Analysis- Kroger

Kroger’s Strengths:
❖ Highly known and well liked private label- Kroger is a large conglomerant that has many
different brands of grocery stores that help deversify their products for different niche
markets, for example an all organic grocery store or a more budget friendly grocery
store. Because they have a wide customer base this allows them to have strong pricing
power over producers and maintain a significant advantage over smaller retailer grocers
as well.
❖ Reliable customer base- Kroger has been a major name in groceries for decades, all the
while expanding, they have kept a strong customer base by maintaining reliable
products and customer service that create a shopping experience that is consistant and
enjoyable. Now because the Kroger name is associated with a positive experience it
allows them to grow and develop more diverse brands.

Kroger’s Weaknesses:
❖ Debt- Kroger is a large conglomerant with nearly 3,000 grocery retailers with over
400,000 employees and an annual revenue of more than $110 billion from its various
brands. They grew to this size with aggressive mergers and a strong growth strategy
that netted them more assets while also adding to their liability. If Kroger has the
opportunity for future expansion they may lack the resouces and credit needed to secure
financing. Indebtedness can also pose an issue if Kroger sees a significant loss in
revenue that could lead to consolidation and a loss in the companys overall value. In an
extreme case, where Krogers value to debt ratio was too high they would have trouble
pursuing future opportunities due to a higher liability.

Kroger’s Opportunities:
❖ Kroger Private Label- Krogers biggest opportunity is from within, by promoting and
investing in their private labels they could generate a larger return. Their customers see
higher value in these products because they get the same level of quality of similaer
national brands but at a reduced cost due to their lower cost to produce. This presents
Kroger with the opportunity to expand their line of private label items and allow them to
achieve higher profit margins over other national brands. This opportunity would provide
a safer alternative to rapid expansion while also boosting revenue and reducing costs.

Kroger’s Threats:
❖ Rising labor costs- Profit and expenses go hand in hand, and with the size of the Kroger
name brand comes a lot of expenses, with a large percent of that being employees. The
 Kroger brand is built on reliability of its products and customer service, investing in the
employees of the company helps to ensure profitability and growth in the future. As the
cost of living increases, the need for higher wages increases with it. Kroger would have
to absorb that cost, resulting in a lower profit margin, or raise their prices to absorb the
added expense. This could span from the producers as well, causing higher wholesale
prices, and therefore higher retail prices. Higher prices could potentially cause a
decrease in customers and revenue.

Citations:
“The Kroger Co.” The Kroger Co., 2017, www.thekrogerco.com/.