Kroger Tinkers With New Ideas For Downtown Stores

Kroger (NYSE:KR) is experimenting with new urban store formats, grocery delivery, drive-through pickup options and personal shoppers, an executive for the retailer told a University of Cincinnati audience on Friday (May 10).

The largest U.S. grocery chain is headquartered in Cincinnati and uses its stores in the area as a testbed for new retail technology. That includes long-running experiments with checkout technology, including handheld scanning units for customers and a tunnel-like checkout that automatically scans all items on a conveyor belt. Neither of those have spread widely to Kroger stores.

But there's more urgency behind the urban store designs. "We are very actively considering what to do in the urban environment," said Ed Hudson, Kroger senior director of strategic insights. The chain is currently evaluating six new ideas for downtown stores, and more than one will probably make the cut. "There is no one-size-fits-all," Hudson said. On the other hand, the whole idea of coming up with a standard template is to avoid having to start from scratch for every new urban store. "It does us no good to create something that isn't repeatable," he said.

That tension between a reusable template and the need to customize becomes particularly acute in downtown areas, where sometimes it's not possible to build a conventional low-rise grocery store and it's almost never cost effective. Multi-story stores and other odd formats aren't unique to grocers—for example, Target (NYSE:TGT) has escalators that also support shopping carts in some of its multi-story mall anchor stores. But a reusable design that can be tailored to existing buildings is critical to keeping costs down.

Urban stores are also more likely to have more customers with smaller baskets who want to bypass checkout. Hudson said Kroger is experimenting with grocery delivery, and is considering drive-throughs and personal shoppers, depending on what technology will support and what customers will accept.

For more:

- See this Cincinnati Business Courier story

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