Kroger 2014 Annual Report Download - page 70

A-5
ST O R E S
As of January 31, 2015, Kroger operated, either directly or through its subsidiaries, 2,625 supermarkets
and multi-department stores, 1,330 of which had fuel centers. Approximately 48% of these supermarkets
were operated in Company-owned facilities, including some Company-owned buildings on leased land. Our
current strategy emphasizes self-development and ownership of store real estate. Our stores operate under
several banners that have strong local ties and brand recognition. Supermarkets are generally operated under
one of the following formats: combination food and drug stores (“combo stores”); multi-department stores;
marketplace stores; or price impact warehouses.
The combo store is the primary food store format. They typically draw customers from a 2 – 2½ mile radius.
We believe this format is successful because the stores are large enough to offer the specialty departments
that customers desire for one-stop shopping, including natural food and organic sections, pharmacies, general
merchandise, pet centers and high-quality perishables such as fresh seafood and organic produce.
Multi-department stores are significantly larger in size than combo stores. In addition to the departments
offered at a typical combo store, multi-department stores sell a wide selection of general merchandise items
such as apparel, home fashion and furnishings, outdoor living, electronics, automotive products, toys and
fine jewelr y.
Marketplace stores are smaller in size than multi-department stores. They offer full-service grocery,
pharmacy and health and beauty care departments as well as an expanded perishable offering and general
merchandise area that includes apparel, home goods and toys.
Price impact warehouse stores offer a “no-frills, low cost” warehouse format and feature everyday low
prices plus promotions for a wide selection of grocery and health and beauty care items. Quality meat, dairy,
baked goods and fresh produce items provide a competitive advantage. The average size of a price impact
warehouse store is similar to that of a combo store.
In addition to the supermarkets, as of January 31, 2015, we operated through subsidiaries 782 convenience
stores, 326 fine jewelry stores and an online retailer. All 132 of our fine jewelry stores located in malls are
operated in leased locations. In addition, 78 convenience stores were operated by franchisees through
franchise agreements. Approximately 54% of the convenience stores operated by subsidiaries were operated
in Company-owned facilities. The convenience stores offer a limited assortment of staple food items and
general merchandise and, in most cases, sell gasoline.
SE G M E N T S
We operate retail food and drug stores, multi-department stores, jewelry stores, and convenience stores
throughout the United States. Our retail operations, which represent over 99% of our consolidated sales
and earnings before interest, taxes and depreciation and amortization (“EBITDA”), is our only reportable
segment. Our retail operating divisions have been aggregated into one reportable segment due to the
operating divisions having similar economic characteristics with similar long-term financial performance. In
addition, our operating divisions offer customers similar products, have similar distribution methods, operate
in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and
in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of
customers, and are allocated capital from a centralized location. Our operating divisions reflect the manner
in which the business is managed and how our Chief Executive Officer and Chief Operating Officer, who act
as our chief operating decision makers, assess performance internally. All of our operations are domestic.
Revenues, profits and losses and total assets are shown in our Consolidated Financial Statements set forth
below beginning on page A-30.
ME R C H A N D I S I N G A N D M A N U F A C T U R I N G
Corporate brand products play an important role in our merchandising strategy. Our supermarkets, on
average, stock approximately 13,000 private label items. Our corporate brand products are primarily produced
and sold in three “tiers.” Private Selection® is the premium quality brand designed to be a unique item in a
category or to meet or beat the “gourmet” or “upscale” brands. The “banner brand” (Kroger®, Ralphs®, Fred