CINCINNATI -- The Kroger Co. is poised to give case-ready fresh meat its biggest real-world trial to date in the United States, with a pilot project that could enable the chain to virtually eliminate meat-cutting at the 154 stores in its Atlanta marketing area.
As reported in last week's SN, the chain, based here, is working with Excel Corp., the Wichita, Kan.-based meat processor that will build a new plant near Atlanta to supply Kroger's units exclusively with their entire tray-wrap meat selection, including fresh store-brand beef, pork and ground meats.
The items will be cut, trimmed, retail-packed and priced at the plant, and shipped directly to the stores. The program is modeled on an Excel operation that has been supplying Loblaw stores in Toronto since 1992. Excel is a subsidiary of Cargill Foods, Minneapolis.
While both Kroger and Excel have experimented with case-ready fresh meat before, the two partners are now banking on the plant's close proximity to the stores, and its dedication to producing only case-ready meat for Kroger, to assure a successful, sustainable program.
The plant, scheduled to be up and running by next October in nearby Newnan, Ga., will cut, trim, tray-pack and price the store-brand beef, pork and ground meats in response to the stores' needs. Approximately 100 items will be shipped from the facility directly to the stores.
In turn, Kroger's meat-cutters will be freed to merchandise and market the meat more effectively on the selling floor, according to officials from both companies.
"Our top priority is serving our customers with the freshest, highest-quality Kroger meat-case items," said Paul Smith, president of Kroger's Atlanta Marketing Area, which operates stores in Georgia, South Carolina and Alabama. "Excel's experience and approach will ensure that we meet these expectations every day with a fully-stocked, expertly cut and packaged meat selection in ours stores."
"This has proven a successful business in Canada," said Bill Buckner, president of Cargill's worldwide beef operations, "and we're excited about moving the case-ready concept forward in the United States."
It's the type of tightly structured, regionally specific part nership that industry experts say is the most likely scenario for allowing fresh, case-ready meat to finally begin to transform supermarket meat operations.
The benefits to Kroger are expected to include reduced out of stocks, better sales and more effective promotions. That the plant will produce meat for Kroger's Atlanta stores only is the key to the system.
"The main reason we're interested in case-ready is we want to spend more time merchandising meat products, not cutting meat products," Paul Bernish, a Kroger spokesman, told SN. "We can't do that if we have to be concerned about the availability of supplies.
"We want a fully stocked meat case all the time. This will give us the opportunity to plan promotions, determine what kind of features would be best for the market at a given time, and then make sure the product will be there," he added.
Kroger doesn't plan to reduce meat-department staffing. "We hope to move our people from inside the meat department out onto the floor, dealing with customers, answering their questions about products, meat preparation and meat safety," he said.
Meat-cutting will still be done in the stores, but it will be limited to specialty cuts and customer requests.
Supplanting the current in-store operation with a total case- ready program is expected to shift store-level cost efficiencies back to the plant. But that isn't Kroger's primary goal, Bernish said.
"The driving force for this is not to reduce the costs of the system, although that's a benefit," he noted. "The key is to see whether having a plant working for us like this will improve our business, both in serving the customers and in our ability to merchandise more effectively. The expectation is, it will."
