Kroger's Competitive Analysis
Competitive analysis
Kroger has been leading the food market in terms of innovation. In fact, the company was the first food store to introduce a scanning system technology for check out as well as for inventory (Dunn, Fielden, Cliff, Keith, & Murass, 2007, P41). New technologies, such as self-checkout systems and computerized point of sale, has helped grocery stores to cut labor costs and save money. Moreover, Kroger offers online shopping so customers can order their products online for delivery or for pick up from the nearest store. In addition, the company uses the latest technology “Pay By Touch system”. Therefore, customers do not need to use traditional payment anymore. Customers can use “E-Wallet” service which only requires a fingerprint …show more content…
or passcode to pay for their grocers. Kroger uses the latest payment technology to make shopping easier and meet their customers’ needs (The Kroger Company, 2015, P4).
Competition in the food industry is very high because there are only four main players: Safeway, Publix, Wal-Mart, and Costco. These firms defined almost 30% of revenue in 2014 and Kroger has the highest market share, around 15%, among these competitors. All the companies are offering natural and organic foods to meet their customers’ needs. Therefore, these main players must compete on price to gain more market share and make more profit. Kroger has it owns bakeries, dairy farms, productions, and distributors center. By having these facilities, the company can offer a huge amount of natural food with affordable prices to its customers. This strategy has helped the company to attract more buyers and maintain the leading market share (The Kroger Company, 2015, P5).
Costco Company
Costco was established in 1976 and is based in Washington U.S. The company offers a variety of products such as food, beverages, home appliances, electronic and office supplies. Costco has its own gas station for its customers and operates pharmacies, optical centers, and hearing aid services. Costco and Kroger are directly competing on price for the same customers. Both companies provide almost the same food products as well as gas station service to their customers. Costco and Kroger have more than $35 billion in market capitalization as well as enterprise values. So, both companies are quite similar in size and have high equivalent margins.
Wal-Mart Stores
Wal-Mart was established in 1945 and is based in Arkansas U.S.
The company operates in three different divisions: “Walmart U.S, Walmart International, and Sam’s Club”. Walmart has some global stores while Kroger has stores only in the U.S. Kroger’s main business is food products whereas Walmart offers different products and service such as discount stores, supermarket, and supercenters. Although Walmart has more diversity products than Kroger, both companies are competing for the same customers through low prices and sale promotions. In terms of market capitalization and enterprise value, Walmart is considerably bigger than Kroger. Walmart and Kroger have a huge size difference and both offer different products, but Walmart received just around 20% weighting in the comparable margins (The Kroger Company, 2015, …show more content…
P12).
Whole Food
Whole Foods is a grocery store that trades organic and natural foods products. The company has approximately 431 stores in America and it is operating in Canada and England. Whole Foods offers a wide variety of high-quality organic foods and for that reason the company charges premium prices.
Whole Foods focuses on innovation and products differentiation to compete with other grocery stores. There are many big players in the food industry and Whole Foods is ranked eight in market share. Walmart is considered to be the biggest competitors for Whole Foods, followed by Kroger and Costco. The company’s main strength is to offer organic foods because it is recognized as the first food supermarket “Certified Organic” in America. Moreover, Whole Foods customers are educated, middle to high-class income, and health conscious. Therefore, the company concentrates on natural foods and environment issues to attract more customers and gain more market share. However, other competitors such as Walmart, Kroger, and Costco, have started offering organic foods besides other products which are called “hybrid” stores. Therefore, Whole Food might lose more market share in the future (Fung, Geng, Kim, Zhou, Zou, 2016, P 1-6).
Kroger competitive strategy
Kroger uses low prices and a product differentiation strategy to stand against its competitors.
The company offers quality products through its private-label program and manufactures approximately 40% of the merchandises it sells to its customers (The Kroger Co, 2014, P22). Walmart has more than 4400 stores in the United States of America and Walmart is Kroger the biggest competitor in the food industry. Kroger has shown a constant growth while other grocery and supermarket industry have been facing many challenges in terms of growth. In fact, Kroger has beaten Walmart and Costco in market share and price (Bells,
2016).
Throughout the years, Kroger has built a strong brand name and customer loyalty in the food market. The company is leading the food industry in terms of growth and market share. Since the competition is very high in supermarkets and grocery stores, the company has created a market strategy to lead and maintain a strong position in the food market. Kroger’s strategy focuses on private labels and customer loyalty (Du, 2015).
Private label
The private label program is the main competitive advantage that drives the success of Kroger. This program has three different categories: “private selection, the Banner brand, and Kroger Value” with a range of prices. The private label program has helped the company to attract more customers from high, middle and low-income. Furthermore, the company uses private label to check the product quality and to compete on consumer choice (Du, 2015).
Customer loyalty
Kroger has been successful with customer loyalty and this success drives from “a reward program and fuel centers at their supermarket”. Around half of the company stores have a gas station where Kroger customers can fill up their vehicle tank at a cheap price. It is obvious Kroger might not be making a profit from the gas station centers, but the idea is to attract customers to the supermarket (Du, 2015).
Products differentiation
Kroger uses products differentiation as a unique strategy to gain more competitive advantages in the market. Product quality, product variety and customer service are what differentiate Kroger among other competitors. Moreover, Kroger also offers low-fat food products for the healthy conscious customers to meet its customers’ needs and enhance customer loyalty. In addition, the company takes care of its employees and it provides them with a high salary, health and pensions benefits. Kroger provides its employees with full benefits so that the employees can deal with the customers in a professional manner (Dunn, Fielden, Cliff, Keith, Murass, 2007, P 43,)
Kroger has been leading the food market in terms of innovation. In fact, the company was the first food store to introduce a scanning system technology for check out as well as for inventory (Dunn, Fielden, Cliff, Keith, & Murass, 2007, P41). New technologies, such as self-checkout systems and computerized point of sale, has helped grocery stores to cut labor costs and save money. Moreover, Kroger offers online shopping so customers can order their products online for delivery or for pick up from the nearest store. In addition, the company uses the latest technology “Pay By Touch system”. Therefore, customers do not need to use traditional payment anymore. Customers can use “E-Wallet” service which only requires a fingerprint …show more content…
or passcode to pay for their grocers. Kroger uses the latest payment technology to make shopping easier and meet their customers’ needs (The Kroger Company, 2015, P4).
Competition in the food industry is very high because there are only four main players: Safeway, Publix, Wal-Mart, and Costco. These firms defined almost 30% of revenue in 2014 and Kroger has the highest market share, around 15%, among these competitors. All the companies are offering natural and organic foods to meet their customers’ needs. Therefore, these main players must compete on price to gain more market share and make more profit. Kroger has it owns bakeries, dairy farms, productions, and distributors center. By having these facilities, the company can offer a huge amount of natural food with affordable prices to its customers. This strategy has helped the company to attract more buyers and maintain the leading market share (The Kroger Company, 2015, P5).
Costco Company
Costco was established in 1976 and is based in Washington U.S. The company offers a variety of products such as food, beverages, home appliances, electronic and office supplies. Costco has its own gas station for its customers and operates pharmacies, optical centers, and hearing aid services. Costco and Kroger are directly competing on price for the same customers. Both companies provide almost the same food products as well as gas station service to their customers. Costco and Kroger have more than $35 billion in market capitalization as well as enterprise values. So, both companies are quite similar in size and have high equivalent margins.
Wal-Mart Stores
Wal-Mart was established in 1945 and is based in Arkansas U.S.
The company operates in three different divisions: “Walmart U.S, Walmart International, and Sam’s Club”. Walmart has some global stores while Kroger has stores only in the U.S. Kroger’s main business is food products whereas Walmart offers different products and service such as discount stores, supermarket, and supercenters. Although Walmart has more diversity products than Kroger, both companies are competing for the same customers through low prices and sale promotions. In terms of market capitalization and enterprise value, Walmart is considerably bigger than Kroger. Walmart and Kroger have a huge size difference and both offer different products, but Walmart received just around 20% weighting in the comparable margins (The Kroger Company, 2015, …show more content…
P12).
Whole Food
Whole Foods is a grocery store that trades organic and natural foods products. The company has approximately 431 stores in America and it is operating in Canada and England. Whole Foods offers a wide variety of high-quality organic foods and for that reason the company charges premium prices.
Whole Foods focuses on innovation and products differentiation to compete with other grocery stores. There are many big players in the food industry and Whole Foods is ranked eight in market share. Walmart is considered to be the biggest competitors for Whole Foods, followed by Kroger and Costco. The company’s main strength is to offer organic foods because it is recognized as the first food supermarket “Certified Organic” in America. Moreover, Whole Foods customers are educated, middle to high-class income, and health conscious. Therefore, the company concentrates on natural foods and environment issues to attract more customers and gain more market share. However, other competitors such as Walmart, Kroger, and Costco, have started offering organic foods besides other products which are called “hybrid” stores. Therefore, Whole Food might lose more market share in the future (Fung, Geng, Kim, Zhou, Zou, 2016, P 1-6).
Kroger competitive strategy
Kroger uses low prices and a product differentiation strategy to stand against its competitors.
The company offers quality products through its private-label program and manufactures approximately 40% of the merchandises it sells to its customers (The Kroger Co, 2014, P22). Walmart has more than 4400 stores in the United States of America and Walmart is Kroger the biggest competitor in the food industry. Kroger has shown a constant growth while other grocery and supermarket industry have been facing many challenges in terms of growth. In fact, Kroger has beaten Walmart and Costco in market share and price (Bells,
2016).
Throughout the years, Kroger has built a strong brand name and customer loyalty in the food market. The company is leading the food industry in terms of growth and market share. Since the competition is very high in supermarkets and grocery stores, the company has created a market strategy to lead and maintain a strong position in the food market. Kroger’s strategy focuses on private labels and customer loyalty (Du, 2015).
Private label
The private label program is the main competitive advantage that drives the success of Kroger. This program has three different categories: “private selection, the Banner brand, and Kroger Value” with a range of prices. The private label program has helped the company to attract more customers from high, middle and low-income. Furthermore, the company uses private label to check the product quality and to compete on consumer choice (Du, 2015).
Customer loyalty
Kroger has been successful with customer loyalty and this success drives from “a reward program and fuel centers at their supermarket”. Around half of the company stores have a gas station where Kroger customers can fill up their vehicle tank at a cheap price. It is obvious Kroger might not be making a profit from the gas station centers, but the idea is to attract customers to the supermarket (Du, 2015).
Products differentiation
Kroger uses products differentiation as a unique strategy to gain more competitive advantages in the market. Product quality, product variety and customer service are what differentiate Kroger among other competitors. Moreover, Kroger also offers low-fat food products for the healthy conscious customers to meet its customers’ needs and enhance customer loyalty. In addition, the company takes care of its employees and it provides them with a high salary, health and pensions benefits. Kroger provides its employees with full benefits so that the employees can deal with the customers in a professional manner (Dunn, Fielden, Cliff, Keith, Murass, 2007, P 43,)