Dive Brief:
- Kroger is consolidating its Dallas and Houston operations and putting its current division president for Dallas, Rudy DiPietro, at the helm, according to a Tuesday emailed announcement. The changes will take effect on Aug. 1.
- The newly established division consists of over 210 stores and 26,000 associates in Texas and Louisiana.
- Kroger’s new Texas Division comes as the company faces steep competition from H-E-B and WinCo.
Dive Insight:
Reorganizing its Texas divisions will help Kroger simplify operations and increase efficiency, allowing the grocer to keep prices low and invest in its workers, said Valarie Jabbar, senior vice president of Kroger’s retail divisions.
DiPietro, who will oversee the single Texas division, joined Kroger earlier this year as president of the company’s Dallas division after a 21-year stint with Ahold Delhaize USA. There, DiPietro served as vice president of omnichannel planning and execution. He has also held executive positions centered around retail operations and merchandising at three of Ahold Delhaize’s U.S. banners — Stop & Shop, Food Lion and Hannaford, according to his LinkedIn profile.
DiPietro’s appointment follows the retirement of Houston Division President Laura Gump, according to the announcement.
Kroger’s new approach to running its Texas division comes as it tries to win over customers from well-established regional grocers like H-E-B and WinCo.
Stronger private brands and omnichannel are giving H-E-B an edge over Kroger in Texas, according to Erich Kahner, director of strategy and insights for Dunnhumby in the Americas.
While Kroger enjoyed an approximately 10-point market share lead over H-E-B in Dallas at the end of 2021, Kroger has lost market share while H-E-B’s has grown, according to Dunnhumby data and Placer.ai foottraffic data Kahner shared on LinkedIn.
“H-E-B is coming up in Dallas, and they’re going to continue to grow,” Kahner said in an interview. “So that makes Dallas, going forward, I think, an area where maintaining market share might be more of a challenge than, say, Houston, where H-E-B is more mature.”
In Houston, H-E-B is narrowing the market share gap with Kroger, with the former going from a 2-point market share lead over the latter in 2019 to an 8-point lead, Kahner shared on LinkedIn.
H-E-B and WinCo are also winning in terms of customer loyalty, with both having stronger emotional connections with their shoppers compared to Kroger, Kahner said in the interview, citing Dunnhumby data. In Texas, H-E-B gets 43% of its average customers’ monthly wallet share — “one of the highest numbers in the country,” — whereas Kroger is in the low 30s, Kahner said.
