Ryan Vero recently met with Sears Holdings associates to share the Grocery and Drug business unit’s current strategies and discuss how his team is contributing to our company’s transformation. Ryan also updated associates on our K-fresh concept which was piloted in Norridge, Illinois, and Kahului, Hawaii.
After speaking, he spent some time answering some questions from associates:
What is the current strategy for Grocery and Drug at Kmart?
To start, grocery is working to improve gross margin and operating profit dollars through a series of initiatives. We are testing a variety of changes to our promotions and pricing on key items and our assortments to better align them with the different members shopping our various stores. My team has also tested the K-fresh concept to include fresh produce, frozen, dairy, deli and meat products. Our three major focus areas include growing profitable sales, improving inventory productivity and engaging our members.
What’s the difference between a Super Kmart and the K-fresh concept?
K-fresh is a significantly different business model than what a Super K is. A Super K is essentially a full-service grocery store. With K-fresh, what we are trying to do is not solve for 100 percent of a person’s grocery needs, but provide 100 percent of our members with 80 percent of their grocery needs. It’s not intended to be the weekly grocery trip store like a Super K. It’s a significantly different business model. We aren’t cutting meat in the store but selling pre-packaged products and are selling thaw-to-serve for bakery items instead. We have also partnered with local bakers to provide our members with fresh and unique items.
We are constantly learning from our members on assortment choices that drive their shopping destination. My team has seen compelling results, including increases in trips and sales and we are evaluating expanding our K-fresh test to additional markets.
What are the biggest challenges we face with the vendor community given the reduced store counts year-over-year?
We focus on how we are driving productivity in the stores that we have. I think every good businessperson can appreciate smart business decisions where you decide to close an unproductive store. Our focus has to be on better serving our members and we have been working with our vendors to do that more effectively. We have assets here as a company that none of our competitors have. Think about the power and leverage we have with our Shop Your Way data that enable us to better understand our members. We are invested in selling our strengths and figuring out what’s right for our business and our members.
How do we determine what food trends are right for us?
We continue to evaluate and assess various food trends in the market. For example, we have certainly gone after the organic trend in the K-fresh stores and have seen positive results from our members. But, as these trends continue to emerge, we must understand how they align with our particular members. We are also focused on customizing our assortments to meet the needs of our members and localizing their demands. It’s important to have the data to understand our individual members and their unique needs. Our job is to figure out how we best meet those needs with the products that they want.
A trend we have also seen is consumers’ loyalty to store brands. We have our private label brands such as Little Ones, Champion Breed, Smart Sense and Image Essentials, which offer a high value for our members. From a member engagement standpoint this is important to drive more impactful results. We are working to grow their baskets and drive more trips.
Ryan Vero is the SVP and President of Grocery and Drug at Sears Holdings.