In this episode of Talks at GS, Kroger CEO Rodney McMullen discusses leading the nation’s largest supermarket chain through the economic shutdown, the impact of the crisis on the nation’s food supply and the expected digital transformation of the grocery business.
On the digital transformation of the grocery business: “Just in the two weeks in March, where [COVID-19] just took off, our online business over doubled. So, if you look at the 92% [growth] for the first quarter – if you look at the first six, seven, or eight weeks of the quarter, it was one growth rate. And then if you look at the last eight weeks, it was well over 100% growth rate and it's continued at those types of growth rates. But it's the work that our technology teams and our store teams have done getting ready for the seamless experience that's positioned us to be ready to handle the acceleration. And it's one of those things where it feels like we've got probably five years’ worth of growth literally in two weeks.”
On the impact of the pandemic on the food supply chain: “If you look at the supply chain before COVID, there would be things where we might have two or three days of inventory in our supply chain. And everything that we were doing was trying to design a whole supply chain, so as soon as you produced it, a warehouse really wasn't a warehouse, it was just a flow-through facility to get it to a distribution to a store—a selling point. And for probably the last 25 years, all the energy and effort has been around how do you take out 0.1 days? Because when you have five—five and a half billion dollars of inventory, it's real money. And now we're starting to say, ‘What is that right amount of inventory? What is the right safety stock?’ We haven't decided yet. We are starting to decide part of the volume from COVID will be permanent. So we need to start building a capacity that can handle things at a higher level.”