In an update on business trends, Kroger detailed operational changes that it has experienced since the COVID-19 outbreak including a rush in critical needs consumer purchasing.
After it experienced strong sales in February, Kroger noted, the pandemic triggered a significantly greater lift in revenue across both physical retail stores and digital channels during March. Sales sharply accelerated in March with identical supermarket sales without the contribution of fuel up about 30%. Dramatically heightened demand in the middle of the month helped drive sales as customers ramped up purchases as they faced movement guidelines and restrictions. The surge tapered afterwards, but sales remained higher than normal in the month’s final week as customers adjusted to the new dining, work and travel conditions. Kroger pointed out that the demand increase has been broad based across grocery and fresh departments.
The company has made significant investments for several years to enhance the customer purchasing experience, Kroger pointed out. As shoppers look for more digital solutions during the pandemic, the company is positioned to support them with pick-up, delivery and ship to home solutions. To advance operations and support the accelerated sales growth, Kroger has been investing in its workforce, associate and customer safety, and the supply chain across its operations.
Kroger added that it is too early to speculate what will emerge as the new normal in food consumption at home or what the impact on sales will be in future periods, but indicated that leadership is closely monitoring the impact of the pandemic on food retail across global markets.
As it considers the rest of the year, Kroger expects volatility in sales as the impact of COVID-19 on the consumer evolves, and it anticipates the effects on full-year results to include continued investments to help customers and associates through the pandemic; delay of certain cost-saving initiatives to focus resources where they are needed to address the impact of COVID-19; uncertainty about the longer-term impact of COVID-19, including the length of travel and other restrictions on food and grocery, fuel and alternative profit streams; and the potential long-term shift in consumer behavior toward eating more food at home.
Kroger leadership believes maintaining current guidance is prudent and is reconfirming guidance for full year 2020.
“Kroger’s most urgent priority is to provide a safe environment for associates and customers with open stores, comprehensive digital solutions and an efficiently operating supply chain so that our communities have access to fresh, affordable food and essentials,” said Rodney McMullen, Kroger’s chairman and CEO. “We are so proud of our dedicated associates who are on the front lines serving our customers when they need us most.”