Wal-Mart challenges Kroger
Wal-Mart challenges Kroger
Discounter on grocer's home turf
By Dan Sewell
Associated Press
With a high school pep band playing and employees clapping, cheering and stomping their feet, Wal-Mart opened its newest Supercenter to dozens of anxiously awaiting customers.
At the same time, the world's largest retailer squarely threw down the gauntlet to Kroger Co., the nation's largest traditional grocer, in its headquarters city and 19th century birthplace.
"This is the big dog of Cincinnati," proclaimed manager Larry Greer as he surveyed the sprawling new Forest Park store. After a boisterous round of "Give me a W..." cheering, he wasn't worried about letting any sleeping dogs lie.
"Everybody's aware of it; this is the home of Kroger," Greer said, adding that Wal-Mart considers Kroger a strong competitor. "Competition keeps us driving. Let 'em come after us."
On the same day, newly expanded Wal-Mart stores re-opened as Supercenters in Fairfield Township and in Florence. At least two more Supercenter openings are planned this summer in Southwest Ohio, Northern Kentucky and southeast Indiana. Wal-Mart, which opened its first local Supercenter less than two years ago in Fort Wright, expects to have 20 in the region in another year or two. They could include a Supercenter in Newport's Cote Brilliante neighborhood, where eminent domain was used to acquire property for a retail development that has yet to be finalized.
Besides expanded offerings that include groceries, the stores usually host restaurants, salons, banks and gas stations. As the Bentonville, Ark.-based company has grown from its rural, small-town roots into metro areas, it's improved the look of stores, and expanded stocks of fresh produce and organic foods.
A total of six Supercenters opened May 17 in Ohio alone. The company, which opened the first Supercenter with groceries in 1988, operated 1,980 across the United States by Jan. 31, the end of its fiscal year.
"We have a lot of plans for Ohio," regional general manager Jerry Spencer said. "The entire state has been fabulous for us."
Carts rolling, shoppers roamed the airy, wide-aisled Forest Park store and its vast displays of electronics such as high-definition TVs and iPods, clothes, housewares and food including organic and ethnic offerings. The store was an immediate hit with some of the suburban female shoppers it's meant to attract.
"It's nice. Everything is right here where you can see it," said Larissa Coston, 33. "I can do everything here."
"It's so big!" said Shannon Gillespie, 31. "There's so much to do. I'm excited to have it here."
Having Wal-Mart come into your backyard, or any neighborhood to compete with you, usually isn't good news, said Jack Horst, a grocery analyst for Kurt Salmon Associates, a consulting firm that has studied the impacts of Wal-Mart expansion in other markets. In Dallas, for example, Wal-Mart's grocery market share more than quadrupled to 21 percent in five years as it opened 20 Supercenters. The company's supply chain and low costs make it a formidable competitor.
"I guess I would feel pretty darn threatened," Horst said of Kroger and other Cincinnati area grocers. "What you're seeing is the beginning of what will feel like a carpet-bombing campaign."
Kroger, which has more than half the market share in the Greater Cincinnati region, is pushing ahead with its own expansion.
"This division has always been very aggressive and very responsive to customers," said Amy Schulten, Kroger's advertising manager for the Cincinnati-Dayton area.
Kroger has announced plans for its first local "Marketplace" stores in three suburban areas. The company's first Marketplace stores opened in Arizona about six years ago, and there are now two in Columbus, Ohio, and 27 total among Kroger's more than 2,500 supermarkets and multidepartment stores nationally.
"It's a new concept, and there's been a lot of interest in this for our hometown area," Schulten said of the Marketplace stores, which are nearly double the size of typical Kroger stores and sell a wider range of foods and nongrocery items such as furniture, office supplies, kitchenware and even fine jewelry.
While expressing respect for Wal-Mart as "a very strong competitor" and saying Kroger is closely watching Wal-Mart's moves, Kroger chairman and chief executive David B. Dillon told analysts in March that Kroger has fared well in head-to-head competition.
Kroger last year increased market share in 20 of 28 major markets in which it faced significant Wal-Mart competition, Dillon said.
He laughed when an analyst suggested that Kroger benefits from the arrival of Supercenters.
"I have never considered the possibility that more Wal-Mart Supercenters might be good for us," he said, but added: "In those markets, you do have a certain amount of fallout, and in that fallout typically we end up doing better than we would had the fallout not occurred."
Like the home improvement business, where aggressive expansion by The Home Depot and Lowe's has crowded out chains such as Builders Square and Hechinger, the battle at the top between Wal-Mart and Kroger is hurting smaller grocery competitors.
Small regional chains like Big Bear in Ohio have become extinct along with hundreds of mom-and-pop supermarkets across the country.
Publication date: 06-03-2006
Discounter on grocer's home turf
By Dan Sewell
Associated Press
With a high school pep band playing and employees clapping, cheering and stomping their feet, Wal-Mart opened its newest Supercenter to dozens of anxiously awaiting customers.
At the same time, the world's largest retailer squarely threw down the gauntlet to Kroger Co., the nation's largest traditional grocer, in its headquarters city and 19th century birthplace.
"This is the big dog of Cincinnati," proclaimed manager Larry Greer as he surveyed the sprawling new Forest Park store. After a boisterous round of "Give me a W..." cheering, he wasn't worried about letting any sleeping dogs lie.
"Everybody's aware of it; this is the home of Kroger," Greer said, adding that Wal-Mart considers Kroger a strong competitor. "Competition keeps us driving. Let 'em come after us."
On the same day, newly expanded Wal-Mart stores re-opened as Supercenters in Fairfield Township and in Florence. At least two more Supercenter openings are planned this summer in Southwest Ohio, Northern Kentucky and southeast Indiana. Wal-Mart, which opened its first local Supercenter less than two years ago in Fort Wright, expects to have 20 in the region in another year or two. They could include a Supercenter in Newport's Cote Brilliante neighborhood, where eminent domain was used to acquire property for a retail development that has yet to be finalized.
Besides expanded offerings that include groceries, the stores usually host restaurants, salons, banks and gas stations. As the Bentonville, Ark.-based company has grown from its rural, small-town roots into metro areas, it's improved the look of stores, and expanded stocks of fresh produce and organic foods.
A total of six Supercenters opened May 17 in Ohio alone. The company, which opened the first Supercenter with groceries in 1988, operated 1,980 across the United States by Jan. 31, the end of its fiscal year.
"We have a lot of plans for Ohio," regional general manager Jerry Spencer said. "The entire state has been fabulous for us."
Carts rolling, shoppers roamed the airy, wide-aisled Forest Park store and its vast displays of electronics such as high-definition TVs and iPods, clothes, housewares and food including organic and ethnic offerings. The store was an immediate hit with some of the suburban female shoppers it's meant to attract.
"It's nice. Everything is right here where you can see it," said Larissa Coston, 33. "I can do everything here."
"It's so big!" said Shannon Gillespie, 31. "There's so much to do. I'm excited to have it here."
Having Wal-Mart come into your backyard, or any neighborhood to compete with you, usually isn't good news, said Jack Horst, a grocery analyst for Kurt Salmon Associates, a consulting firm that has studied the impacts of Wal-Mart expansion in other markets. In Dallas, for example, Wal-Mart's grocery market share more than quadrupled to 21 percent in five years as it opened 20 Supercenters. The company's supply chain and low costs make it a formidable competitor.
"I guess I would feel pretty darn threatened," Horst said of Kroger and other Cincinnati area grocers. "What you're seeing is the beginning of what will feel like a carpet-bombing campaign."
Kroger, which has more than half the market share in the Greater Cincinnati region, is pushing ahead with its own expansion.
"This division has always been very aggressive and very responsive to customers," said Amy Schulten, Kroger's advertising manager for the Cincinnati-Dayton area.
Kroger has announced plans for its first local "Marketplace" stores in three suburban areas. The company's first Marketplace stores opened in Arizona about six years ago, and there are now two in Columbus, Ohio, and 27 total among Kroger's more than 2,500 supermarkets and multidepartment stores nationally.
"It's a new concept, and there's been a lot of interest in this for our hometown area," Schulten said of the Marketplace stores, which are nearly double the size of typical Kroger stores and sell a wider range of foods and nongrocery items such as furniture, office supplies, kitchenware and even fine jewelry.
While expressing respect for Wal-Mart as "a very strong competitor" and saying Kroger is closely watching Wal-Mart's moves, Kroger chairman and chief executive David B. Dillon told analysts in March that Kroger has fared well in head-to-head competition.
Kroger last year increased market share in 20 of 28 major markets in which it faced significant Wal-Mart competition, Dillon said.
He laughed when an analyst suggested that Kroger benefits from the arrival of Supercenters.
"I have never considered the possibility that more Wal-Mart Supercenters might be good for us," he said, but added: "In those markets, you do have a certain amount of fallout, and in that fallout typically we end up doing better than we would had the fallout not occurred."
Like the home improvement business, where aggressive expansion by The Home Depot and Lowe's has crowded out chains such as Builders Square and Hechinger, the battle at the top between Wal-Mart and Kroger is hurting smaller grocery competitors.
Small regional chains like Big Bear in Ohio have become extinct along with hundreds of mom-and-pop supermarkets across the country.
Publication date: 06-03-2006
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