Lowering prices on some fresh produce items has made Kroger Co. “much more competitive” with major discounters and provided a boost to sales, an executive with the largest U.S. grocery chain said.

While Kroger is “not necessarily the price leader” in fresh fruits and vegetables, “our objective is to be within a certain range of the price leader on items that are important to our price-sensitive customers,” Don Becker, an executive vice president with the company, said during a Sept. 29 investor presentation.

Kroger says lower produce prices paying off

“That gives us the flexibility to respond to the market and adjust our prices as our competitors do,” Becker said.

He didn’t specify how much prices were lowered or what items were involved. Representatives with Cincinnati-based Kroger didn’t respond to messages.

Traditional supermarkets are fighting to reverse eroding market share in the $557 billion U.S. grocery industry after Wal-Mart Stores, Inc., and club stores such as Costco Wholesale Corp. expanded food offerings in recent years.

Citing recent company research, Becker said Kroger “discovered that produce was missing in many customers shopping carts… they were either not buying it from us, or they were buying it from someone else.”

He added that, “We responded to our customers by investing in lower prices on produce.”

Reducing fruit and vegetable prices, along with stepped-up efforts to promote locally grown products, helped increase sales volumes last year, Becker said, adding that “our tonnage continues to be strong this year as well.” Kroger has 2,468 stores in 31 states, along with 784 convenience stores.

While Kroger expects improved sales this year, high unemployment continues to pressure many customers, company executives said. Food stamp use is “about twice where it was a few years ago,” Kroger’s chief executive officer, David Dillon, said during the same conference Sept. 29.

“We see continued uncertainty on the part of customers,” Dillon said. “Clearly the consumer is in some kind of funk, and we don’t expect that to change any time soon until the economy improves.”

Kroger previously forecast sales at identical supermarkets to increase 2% to 3% during 2010. In the three months ending Aug. 14, Kroger’s identical-store sales excluding fuel rose 2.7%, to $14.95 billion. Identical stores have been open without remodeling or relocation for at least five full quarters.