Grocers: Kroger

1. INTRODUCTION: CASE OVERVIEW AND KEY ISSUES

The case Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco and Whole Foods situation explains the costs and strategies related to a companies growth and expansion. Kroger is the main focus of this case. In 2006 Kroger’s was the second largest seller of groceries by revenue with an estimated $60 billion. The success of Kroger Company began in 1883 and which became one of the first chain stores in the country. Kroger then expanded its stores by buying out local competitors with low prices when the economy was suffering. Throughout the twentieth century, Kroger implemented several innovations to throw itself above the competitive advantage. By the 1950’s Kroger had built a reputation of producing fresh good quality products and began to label products with “sell by” dates and nutritional facts. Kroger took on multiple acquisitions helping push its expansion to the West. Under the full leadership of David Dillon Kroger increased revenue and lowered its debt dramatically and also found new ways to increase customer frequency. Kroger also sustained a four-month strike by the United Food and Commercial Workers union, which impacted not just Kroger, but Safeway, and Albertson’s.

Retail grocery sales represent a significant amount of the U.S. economy. The industry that Kroger competes in is highly competitive. This resulted in Kroger reducing its operating costs in order to maintain profitability and reduce debt. The grocery industry grew close in line with gross domestic products, and was considered to be a mature industry. For Kroger to maintain its stability in the market it relied on effective strategies differentiating itself from the completion. Kroger was able to separate itself by remodeling the store format, store location, its product mix, quality, and services.

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