Lowering prices on some fresh produce items has made Kroger Co. âmuch more competitiveâ with major discounters and provided a boost to sales, an executive with the largest U.S. grocery chain said.
While Kroger is ânot necessarily the price leaderâ in fresh fruits and vegetables, âour objective is to be within a certain range of the price leader on items that are important to our price-sensitive customers,â Don Becker, an executive vice president with the company, said during a Sept. 29 investor presentation.
âThat gives us the flexibility to respond to the market and adjust our prices as our competitors do,â Becker said.
He didnât specify how much prices were lowered or what items were involved. Representatives with Cincinnati-based Kroger didnât 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 âdiscovered that produce was missing in many customers shopping cartsâ¦ they were either not buying it from us, or they were buying it from someone else.â
He added that, âWe responded to our customers by investing in lower prices on produce.â
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 âour tonnage continues to be strong this year as well.â 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 âabout twice where it was a few years ago,â Krogerâs chief executive officer, David Dillon, said during the same conference Sept. 29.
âWe see continued uncertainty on the part of customers,â Dillon said. âClearly the consumer is in some kind of funk, and we donât expect that to change any time soon until the economy improves.â
Kroger previously forecast sales at identical supermarkets to increase 2% to 3% during 2010. In the three months ending Aug. 14, Krogerâs 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.