Kroger’s first venture outside the U.S. is a big one. The U.S. grocer will sell its Simple Truth products on Alibaba’s Tmall Global platform, China’s largest business-to-consumer marketplace.
This strategic move is designed to support two of the company’s key Restock Kroger pillars — redefine the grocery customer experience by elevating its private labels, and drive top line growth through alternative revenue streams. Private label is clearly a matter the grocer is taking more seriously, with Kroger recently promoting Brand VP Gil Phipps to VP of Branding, Marketing and Our Brands. Kroger will introduce a new private label apparel line, Dip, in its Fred Meyer and Kroger Marketplace stores this fall.
In 2018, the Simple Truth line reached more than $2 billion in annual sales; it is the second-largest brand sold in Kroger stores. The Simple Truth brand includes natural and organic foods and health products, which aligns with China’s growing demand for high quality and organic food products.
Kroger selected the initial line of products to sell in China through consumer surveys, and will add more products in the future, according to a report from the Wall Street Journal.
“Kroger’s decision to sell its products on Alibaba creates a new outlet for its very popular private brands and demonstrates that Kroger will not remain static in the fast-changing supermarket landscape,” said Moody’s VP Mickey Chadha in commentary provided to Retail TouchPoints. “This initiative is a natural progression in Kroger’s strategic transformation to compete on all fronts and not only in its traditional brick-and-mortar comfort zone as it comes on the heels of its equity stake in British online supermarket Ocado, its purchase of meal kit company Home Chef and launch of its grocery delivery service Kroger Ship.”
Kroger Ship also falls in line with the grocer’s private label push, with the retailer offering a curated selection of 4,500 Our Brands private label items as well as 50,000 center-aisle grocery and household products. Beyond this service, Kroger has even begun testing autonomous grocery delivery through a partnership with Nuro, an unmanned road vehicle startup.
Early in 2018, there was speculation that Kroger and Alibaba could form an alliance of some sort, particularly after a report came out that senior Kroger execs had met with Alibaba officials in China last December. Kroger executives told the WSJ that they have been negotiating their first overseas sales push “for months,” with execs also recently visiting India, Japan and Europe to study the habits of foreign consumers and search for technologies to use in the U.S.