HCal wrote: ↑January 20th, 2023, 5:49 pm
storewanderer wrote: ↑January 20th, 2023, 12:55 am
Kroger previously had multiple private label lines for natural/organic (Naturally Preferred, PS Organic, Kroger Organic) and consolidated all of them into Simple Truth. I would take it a step further and convert Simple Truth into a 100% "Organic" AND "free from" brand and move the standard Kroger private label to being the "free from" brand that "Simple Truth" currently is. Then they can use that new "Smartway" label for the products with junk ingredients.
I am curious how O Organics can have much value given how few SKUs it has and how inconsistent those SKUs are by category. The brand is missing in key categories like yogurt, secondary but expected categories like pretzels, yet is over-assorted in categories like tea bags.
If the merger goes through, the combined company would have access to all the products from both lines. The two lines would be combined, any overlap removed, and then the whole thing could be rebranded.
The reason I'm partial to O Organics is because it has better name recognition in wealthier markets, such as Orange County, parts of LA, and the entire bay area. Simple Truth may be better known in the midwest and south, but are people in Ohio or Georgia really buying that many organic products compared to California?
Actually a big reason why Simple Truth has been so successful is because the way Kroger has handled the brand does have a lot of consumers in Ohio and Georgia buying these products. By pricing these items just moderately like .10-.50 higher than the standard Kroger brand item, you would be very surprised how many customers in the midwest will take the Simple Truth Organic item instead of a national brand or instead of a Kroger brand. I have personally found some items in Simple Truth Organic that are far better quality than a comparable Kroger brand item as well. It isn't every customer but it is enough customers to produce very significant sales for this product line, the most successful product line Kroger has ever created. If you spend time in the stores that run the core Kroger programs successfully (Smiths, Frys, Dillons, King Soopers) and observe shoppers you will understand just how strong this product line is. Ralphs with smaller stores does not seem to slot as many SKUs of the line or does not display it as well in many cases, but the other issue I noticed in Ralphs was they seem to have a lot of issues with out of stocks on these products often getting one row of space (not sure if that means they're flying off the shelves or Ralphs is not stocking efficiently). FoodsCo is a total joke with this line, yes there are items, but not many.
I took a hard walk through Smiths tonight and looked very closely at the Simple Truth line in food categories. Looking at specifically food categories (including dairy), I estimate 85% of the Simple Truth items present in food/dairy are Simple Truth Organic. These items say "Organic" in very large letters on the package (the "Simple Truth" part is much smaller). If you removed the "Organic" items from Simple Truth, there would not be enough products left to have a meaningful product line.
There are a lot of other odd Simple Truth items that are non-Organic like paper towels, some drug, and some baby non-consumables that are a little strange and I am sure have very slow sales. Also I have no idea how you can have Organic Seltzer Water but some supplier is making Simple Truth Organic Seltzer Water and it is tasty.
So I do not expect O Organics to continue long term under Kroger. The problem is in the 40 stores you define where O Organics is so successful, there are hundreds of other stores out there where O Organics is a complete loser of a brand, the product is not assorted properly, does not move well, and has a lot of shrink/spoilage. I also expect to see a significant number of these stores you cite where O Organics is successful to be divested. I have not personally seen stores where O Organics is successful in many years, back when Safeway was developing and pushing the line hard in conjunction with Lifestyle remodels and a few years after was the last time I saw that line having any degree of success. Now, even in NorCal, I see short dates constantly on O Organics products throughout the store including dry grocery. Products are being discontinued constantly. I am getting those $1 off any O Organic Item coupons all the time in the app and I often have trouble finding anything to buy either due to the poor mix or the terrible pricing and this is a problem at every single Safeway/Albertsons banner I visit, no matter the region; there is no region that somehow has this O Organics line going better than the others, the brand is lost everywhere. The customers who bought that stuff back in the few years after the Lifestyle remodels eventually figured out Safeway was ripping them off and have moved on to Trader Joe's or Whole Foods or even Sprouts who all have a better mix of generic Organics for lower prices and haven't looked back. The failure of Albertsons to develop a consistent, successful private label program like Kroger has across the board has really held them back but will be a moot point soon as the messed up (90% of their problem was lousy pricing/constantly promoting name brand cheaper than private labels which led to low velocity) Safeway private label program rides off into the sunset once and for all.
Perhaps SpinCo can have the brand (they'd be better off just going with Wild Harvest from UNFI, which is popping up in quite a few places; noticed Natural Grocers has some Wild Harvest items now too). When Kroger started to roll its own brands products into Harris Teeter and Mariano's/Pick N Save, the very first thing they did getting their items into those stores, was get the Simple Truth products into those stores. This is a high priority because this is a really, really strong product line.