With foreign newcomers like Lidl and Aldi landing on our shores, and online services like Amazon creeping onto an already crowded grocery battlefield, traditional grocers are willing to do whatever they can to keep customers coming back. At Kroger, that means slashing prices on popular staples like milk and eggs, in an effort to signal to customers that their stores have the best deals on the everyday items they need.
Kroger — which also operates Fred Meyer, Ralph’s, and Fry’s — announced declining sales at established locations for the second quarter in a row, a first after more than seven years of growth, notes the Associated Press.
While it costs money to cut prices on such items, Kroger Chief Financial Officer Michael Schlotmansays the investment is worth it in certain markets where rivals had “very hot features” on milk and eggs.
“While this affects gross margin in the short-term, it is less expensive than regaining a customer’s loyalty,” Schlotman said on an earnings call.
When asked by analysts about the looming threat of Lidl, which has other supermarkets cutting prices and renovating stores to prevent losing customers, Kroger executives sounded confident that they could compete with the German discount store by offering things its new rival won’t.
“If you look at the base experience of the supermarket in the U.S., we would typically offer more services in terms of every store would have a butcher that’s there ready to help,” said CEO Rodney McMullen, adding that when it comes to things like produce, Kroger’s will also offer a better variety of fresh items.
“We are confident that we will continue winning with our people, our food, and the customer experience, and we will not lose on price,” McMullen vowed.