Kroger breaks 13 year same store sales increase

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storewanderer
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Kroger breaks 13 year same store sales increase

Post by storewanderer »

We all knew it would happen someday. And this was the day.

I feel like Kroger is having a lot of missteps lately. They are not handling the current deflationary environment correctly and I think they will continue to lose sales given the path they are going down.

I am finding the past couple months that they have been discontinuing many items I bought, primarily store brand and ethnic food items. I am really frustrated; just this week two more items I bought there regularly got "close out" tags. The problem is many of these were items I bought, and bought from them because they were either the best price or most convenient choice. I can and will find these items elsewhere. Any time I go elsewhere, I will likely buy other items too (that I would have bought from Kroger)... so they lose more sales from me than just those items.

I am also finding their pricing is creeping up. Sure, they are still well below Safeway/Albertsons, but that isn't saying much. Everyday shelf pricing is above Wal Mart in milk; it never used to be this way, and there is no reason why it should be this way given that Kroger has its own dairy facility and Wal Mart is using all third party suppliers. WinCo pricing has gone down a lot in this deflationary period while Kroger's prices have been either staying the same or going up.

During the last deflationary period, Kroger used it to their advantage and cut prices like crazy and widened the price gap between them and their competitors. This time they seem to be trying to keep prices the same.

We see in this earnings report Kroger decided to hit its profit number but sacrifice its sales number. This is a major departure from Kroger's past ways and it is very unfortunate they decided to do this. I can only wonder how much marketshare Wal Mart, Sprouts, WinCo, and possibly even Albertsons/Safeway picked up from them this past quarter...
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Re: Kroger breaks 13 year same store sales increase

Post by jamcool »

Yet their Fry's division in AZ is in a building and hiring boom-a new store to be built in Downtown Phoenix and several new Marketplace stores planned or under construction. Meanwhile, Albertsons/Safeway is closing stores and Walmart, Target, and Bashas' are frozen in store count. Winco hasn't opened any new stores recently and hasn't built yet on proposed sites.
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Re: Kroger breaks 13 year same store sales increase

Post by SamSpade »

jamcool wrote:Yet their Fry's division in AZ is in a building and hiring boom-a new store to be built in Downtown Phoenix and several new Marketplace stores planned or under construction. Meanwhile, Albertsons/Safeway is closing stores and Walmart, Target, and Bashas' are frozen in store count. Winco hasn't opened any new stores recently and hasn't built yet on proposed sites.
Greater Phoenix was slower to return from the 'Great Recession' but seems to be doing well again, based on my recent visit. Perhaps these Fry's moves are just a reflection of that. I am surprised how Arizona has so many banks, food purveyors, etc. but then again people move there from anywhere so perhaps Kroger is working to keep themselves fresh on the game.
U.S. growth rate hits new low as migration to the Sun Belt continues
Despite the lower national growth rate, the new statistics herald good news for several Sun Belts states where recent population shifts are reversing slow growth during the Great Recession and immediate post-recession years. Seven of the eight fastest growing states are located in the West: Utah, Nevada, Idaho, Washington, Oregon, Colorado, and Arizona. Each of these registered growth rates exceeding 1.6 percent in 2015- 2016, and Montana, which ranked 14th, grew by 1 percent. All of these western states (Colorado excepted) grew more rapidly in 2015-16 than in 2014-15.
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Re: Kroger breaks 13 year same store sales increase

Post by BillyGr »

I suppose in the end it depends on why the numbers are lower?

If they are lower in sales simply due to less people shopping or each one buying less, that would indicate a problem, but if it's only due to the items costing less, it is really an issue?

For instance, if item A used to cost $3 and sold for $5 and now the cost declines to $2 and they lower the selling price to $4, their sales amount (in $) may be lower (unless people choose to purchase more items), but they still wind up with exactly the same profit at the end of the day so it doesn't really impact their bottom line?
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Re: Kroger breaks 13 year same store sales increase

Post by arizonaguy »

SamSpade wrote:
jamcool wrote:Yet their Fry's division in AZ is in a building and hiring boom-a new store to be built in Downtown Phoenix and several new Marketplace stores planned or under construction. Meanwhile, Albertsons/Safeway is closing stores and Walmart, Target, and Bashas' are frozen in store count. Winco hasn't opened any new stores recently and hasn't built yet on proposed sites.
Greater Phoenix was slower to return from the 'Great Recession' but seems to be doing well again, based on my recent visit. Perhaps these Fry's moves are just a reflection of that. I am surprised how Arizona has so many banks, food purveyors, etc. but then again people move there from anywhere so perhaps Kroger is working to keep themselves fresh on the game.
U.S. growth rate hits new low as migration to the Sun Belt continues
Despite the lower national growth rate, the new statistics herald good news for several Sun Belts states where recent population shifts are reversing slow growth during the Great Recession and immediate post-recession years. Seven of the eight fastest growing states are located in the West: Utah, Nevada, Idaho, Washington, Oregon, Colorado, and Arizona. Each of these registered growth rates exceeding 1.6 percent in 2015- 2016, and Montana, which ranked 14th, grew by 1 percent. All of these western states (Colorado excepted) grew more rapidly in 2015-16 than in 2014-15.
Fry's suffered from a lack of investment in the early 2000s. Yes, they've been the #1 grocer in the Phoenix area ever since the Kroger / Fred Meyer merger with the combination of Kroger's Fry's chain and Fred Meyer's Smith's and Smitty's chains. However, from around the time of the merger until the mid 2000s there were very few new stores built and most of the existing stores were rather untouched (with deteriorating interiors). The stores were dirty and Fry's couldn't really figure out how to get a store to work in a "higher end" area (as almost the entire store base was built in solidly middle class areas from the 1970s - 1990s) and by the early 2000s many of these areas started to decline and turn into more "working class areas" as newer areas were built up on the fringes of town. Albertsons, Bashas, and Safeway built dozens of stores in the new "fringe" developments that were hurt the most in the housing market crash / recession (hence why they had the most store closures) whereas Fry's wasn't really affected as they didn't have stores there to begin with. Most of the new Fry's stores now are going up near Albertsons, Safeway, and/or Bashas stores that were built 10 - 15 years ago.

Safeway has actually been fairly stable in Phoenix (excluding Albertsons). Safeway has only closed 3 Safeway bannered stores in the Phoenix area over the past 5 years. 19th Ave / Union Hills, 51st Ave / Olive, and 67th Ave / Peoria. All 3 stores were in neighborhoods that were one time middle class and have now become working class and Safeway's pricing structure and product mix no longer could be supported by the surrounding area.
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Re: Kroger breaks 13 year same store sales increase

Post by storewanderer »

I was just in Smiths in Reno tonight. They are in the process of disassembling the nutrition aisle and extensive Asian and Hispanic foods aisles and have removed numerous of the items. The nutrition items are being spread out throughout the store again (like they were a few years ago before the nutrition aisle was added in), but there seem to be fewer. The Asian and Hispanic foods areas have been, literally, gutted. Really disappointing. Kroger is losing a lot of my shopping dollar. The smaller independents with the ethnic items will get some more out of me now... I suppose it is nice to support small businesses.
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Re: Kroger breaks 13 year same store sales increase

Post by pseudo3d »

storewanderer wrote:I was just in Smiths in Reno tonight. They are in the process of disassembling the nutrition aisle and extensive Asian and Hispanic foods aisles and have removed numerous of the items. The nutrition items are being spread out throughout the store again (like they were a few years ago before the nutrition aisle was added in), but there seem to be fewer. The Asian and Hispanic foods areas have been, literally, gutted. Really disappointing. Kroger is losing a lot of my shopping dollar. The smaller independents with the ethnic items will get some more out of me now... I suppose it is nice to support small businesses.
I've never been impressed with Kroger's international items, ever. :roll:

Well, they did have that Taste of Spain thing and at least one store had samples, and I was able to get Iberico ham for 50% off. That was pretty awesome.

Part of Kroger's problem I think is the same problem that Albertsons has had as of late...just not coming out of the innovation department. Sure, Kroger has streamlined some of its processes that Albertsons has yet to grasp, but they just haven't come out with anything really *new* and exciting in recent times.
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