Retail

Kroger Takes Steps To Counter Amazon’s Grocery Strategy

In a series of corporate maneuvers designed to counter Amazon’s much-heralded move into the grocery arena, Kroger, the country’s biggest grocery chain, is looking to cut prices.

The Wall Street Journal reported that Kroger, also the third-largest retailer in the United States, has been hit by negative sentiment over Amazon’s acquisition of Whole Foods.  The company has seen its market cap slip by 35 percent year to date.   That’s a bit worse than the food industry in general, where as a group stocks are off 20 percent through the same time frame.

Among corporate events, the company will report earnings Friday.  The Street is looking for the company to see 3 percent top-line growth to $27.5 billion, measured year over year.  Earnings per share may dip a bit, and the Journal notes that guidance may be taken down a bit.

Among initiatives, the company has been taking prices down on staples, and has also brought online options to customers, to expand to 1,000 stores and with delivery options coming through Shipt and Uber.  Corporate wide, the company has also been tamping down on costs.   This comes against a backdrop where same-store sales have taken a dip across two quarters, reversing a trend of 13 annual periods where that metric saw growth.

The publication stated that online initiatives through Amazon – especially in organic products – may in fact be a competitive challenge to Kroger.  But the company’s organic line, which a spokesperson said was about 14 percent of the company’s top line, representing $16 billion in sales.  “We’re very proud of the role we’ve played in making natural and organic products more affordable and accessible to all customers, especially for shoppers on a budget,” said the spokeswoman.

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