Kroger posted some pretty impressive sales increases for the first quarter, surprising given the current climate. Are they doing something differently or are grocers simply benefiting from today's new "back to basics" philosophy?
Total sales increased 3.9% over the prior year. Identical supermarket sales, excluding fuel, increased 3.1% over the same period last year. This doesn't include fuel sales since gas prices are much lower than the same time last year. Kroger even confirmed it expects to end the year with supermarket sales growth of 3% to 4%, without fuel. This comes as rival grocer SuperValu says it will miss analyst expectations for this quarter, what with consumers spending less.
It's astounding really, since traditional supermarkets are being squeezed on every level. First by the competition with discount stores, warehouse clubs, even dollar stores stocking more food items. And second, from the economy itself making bargain hunters out of nearly everyone.
What is Kroger doing right?
More promotions and lower prices across the board. By introducing its own version of the dollar menu, "10 for $10," and doing so on basics. Things we need every day like juice and household items. It's nice to see a supermarket focus on giving people what they need rather then trying to get them to buy what they didn't.
There's a couple of disconcerting pieces of information buried in all this. That we're shopping the center aisles more, where packaged prepared foods are instead of the fresh food like produce, meat and dairy on the perimeter. Makes me worry a bit about nutrition and health. Here's an idea, more promotions in the produce department. Say, 10 apples or bananas for $10? Tail on shrimp, 10 for $10? Just a thought.
It also seems we're all more inclined to buy store brands than the bigger national names. Stores are even offering them as part of larger promotions. This bodes badly for established brands but well for common sense. Private label products are often as good or better than the branded versions.
Seems Kroger's gotten smarter and so have its shoppers.
Take the first steps to building your portfolio.View Course »