Kroger Co. (KR) doubles up Walmart on market share

Walmart second in grocery sales, Meijer third

CINCINNATI - The Kroger Co. took market share from its two largest rivals in Cincinnati last year, retaining its title as regional grocery giant.

New grocery sales data, obtained by WCPO Digital from a Florida-based research firm, shows Kroger held a 40.1 percent market share in 2012. That is more than double the 19.1 percent share held by 22 Walmart Supercenters. Meijer ranked third in Cincinnati with a 10.5 percent share, while Remke/Biggs ranked sixth behind Sam's Club and Costco Wholesale. The numbers represent a percentage of all grocery sales, estimated at $5.2 billion, in the 15-county region surrounding Cincinnati, according to Chain Store Guide of Tampa.

Remke/Biggs declined to comment for this story. Walmart and Meijer did not immediately respond.

"Our local division continues to invest in our stores with remodels and new locations," said Rachael Betzler, spokeswoman for Kroger's Cincinnati/Dayton division. "We're always looking to change with the customer as well, such as adding the Kroger app for mobile devices, increased awareness of downloading digital coupons … and adding technology and training to get our customers through the checkout lines quickly."

Market Share Growth Means Jobs

In its annual report to shareholders, Kroger calls market share "an important part of our long-term strategy as it best reflects how our products and services resonate with customers." When Kroger share grows, so does the company's payroll. Kroger created 20,000 new jobs since 2008, including about 5,000 in Cincinnati.

Kroger uses Nielsen Homescan surveys to track market share. Its annual report said the company increased share in 10 of its 19 marketing areas nationwide last year, including nine of the 17 markets where it competes against Walmart.

As recently as 2006, published reports indicated Kroger held a 54 percent market share in Cincinnati, while Walmart had 17 stores and a 16.5 percent share.

By 2010, Kroger's local share dipped to 39.1 percent, according to data from Chain Store Guide. Kroger has gained a full percentage point in market share since then, while Walmart lost 1.4 percent and Meijer, 1.2 percent. Remke/Biggs nearly doubled market share to 2.2 percent, but its seven stores generated an average of $16.5 million in 2012 sales, roughly 40 percent less than the average Kroger.

The data shows Kroger generated $2.1 billion in revenue at 73 stores, or $28.5 million per store, in the 15-county region surrounding Cincinnati.

Walmart has been taking hits in the national media for customer service problems, while Kroger has enjoyed a surging stock price after posting 37 consecutive quarters of same-store growth.

The Right Mix

A food industry analyst said Kroger's merchandising skill has proven the difference maker for the Cincinnati-based grocery giant.

"Kroger spent a lot of timeimproving their value proposition to consumers," said Chuck Cerancosky, managing director and analyst for Northcoast Research in Cleveland. "That includes promotions, pricing and having a relevant merchandising mix to the neighborhoods they serve. I don't think any other chain is as good at havingthe right mix of merchandise in the store."

What's not clear yet is what impact Kroger's new pricing strategy will have on market share. In February, Kroger  lowered prices on 3,500 items in its Cincinnati and Dayton stores, but ended the practice of doubling manufacturer coupons. Kroger has said the new pricing program has increased the number of households shopping regularly in its stores, but declined to provide details on market share.

When Kroger announced its new pricing strategy, a Kroger executive said Cincinnati market share increased in 2012, but not as rapidly as national market share gains.

"Price is certainly a top concern when our customers are deciding where to do their shopping," Vice President of Merchandising Scot Hendricks said at the time. "We're going to hang our hat on our three big emphasis areas of the fuel, the low price and the faster checkouts."

See how market share of area retailers stacks up below:

 

 
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