Cincinnati-based Kroger Co. sent tremors through the grocery industry last week by announcing a restructuring of its pricing model to better compete with Wal-Mart Stores’ “everyday discount” formula.
Kroger is expected to develop a discounting blueprint that can be adapted by all 15 of the company’s supermarket chains, which include Fry’s, Kroger, Ralphs, Smith’s, and Owen’s. Industry analysts expect other grocers to respond accordingly in 2002, thereby touching off major price wars.
Bentonville, AR-based Wal-Mart has almost effortlessly become the world’s No. 1 food retailer over the last five years. The mass merchandiser operates full-line supermarkets inside its 1,100 Supercenters and is preparing to roll out as many as 500 separate 40,000-square-foot Neighborhood Markets.
Supermarket chains have reacted with a host of marketing tactics — store redesigns, home meal replacement programs, loyalty efforts — but never before have attempted to compete on price.
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