Competition spurs price slashing

Kroger’s Columbus division announced sweeping price cuts Wednesday on more than 2,000 products, hoping to gain an edge against a frenzy of competition in the retail food industry.

The cuts will affect Kroger’s private-label products. For example, Kroger brand 16 oz. peanut butter will drop to $1.49 from $1.99; loaves of Private Selection bread will drop to $1.88 from $2.69; and eight-roll packs of Home Sense paper towels will be $4.20 cheaper, decreasing to $7.99 from $12.19.

Though some of these items might already have been on sale, the cuts do represent real savings that will be passed on to consumers, said Phil Lempert, grocery industry expert and operator of supermarketguru.com.

Kroger acknowledged the

high levels of competition as a motivating factor in reducing prices on its store-brand items.

“We know this is a competitive time for retail, and we want to make sure we are positioned right on price,” said Jennifer Jarrell, a Kroger spokeswoman.

“Competition is more fierce than ever,” wrote Jim Dudlicek, senior editor at industry publication Progressive Grocer, commenting by email. “So larger supermarket retailers like Kroger that can afford to invest in pricing are doing so in the battle pitting traditional grocers against the likes of Walmart as well as online retailers.”

This competition for customer dollars is bound to grow even more intense with the impending June 15 opening of Lidl’s first U.S. stores. Though those locations are scattered throughout North Carolina, South Carolina and Virginia, Lidl, a German hyper-discount food retailer, is aiming for rapid expansion.

Aldi, another German discount supermarket, already has 1,600 U.S. locations and is looking to bring that number to almost 2,000 by the end of 2018, according to the company’s website.

The vast majority of items offered by both Lidl and Aldi are low-cost, private-label products.

Lempert believes that the expansion of these discount chains is the primary motivation for Kroger’s price cuts.

“What they are really trying to do here is shore up for the war against Lidl and Aldi,” said Lempert. “The rumor is that (Lidl) will have 300 stores by the end of the year.”

Despite Kroger’s fight against a growing online retail segment, traditional U.S. food retailers and the European discount invasion, all hope is not lost, says Terrie Ellerbee, the Midwest editor for the Shelby Report, a grocery industry publication.

“Kroger is such a smart retailer,” said Ellerbee. “I think Kroger is firing on so many levels.”

She added that Kroger has done well where many other retailers haven’t, citing their “customer first” strategy and longstanding loyalty discount programs as tools the retailer has used effectively.

“The war hasn’t started yet, but the battle has,” Lempert said.