Kroger is counting on making up what it loses on price margins from price cuts on frequently purchased items through greater sales volume. This is the second such move to trim prices.
A year after it cut prices on thousands of grocery items, the Kroger Co. said Wednesday it has enacted a second round of price cuts on about 2,700 items that will reduce prices from a few cents to a few dollars in some cases.
The price cuts, which the nation’s largest supermarket chain began enacting in March and completed Wednesday, mainly affect Kroger’s meat department, its fresh produce, and its natural and organic foods.
“It’s not a campaign, it’s not a promotion, it’s a price reduction plan that reduces the prices on the most frequently purchased items,” Jennifer Jarrell, a spokesman for Kroger’s Columbus division, which includes the grocer’s 17 Toledo area stores including its Lambertville store in Michigan.
In March, 2014, Kroger, the area’s dominant grocery retail chain, enacted price cuts on thousands of items that were purchased most frequently by customers.
But as a counter-move, Kroger offset those cuts by eliminating giving double-value on coupons.
Ms. Jarrell said there is no counter-move this time. “We are not compensating for the price reduction by raising prices on other items or things like that,” she said.
Instead, Kroger is betting that cutting prices on the most frequently purchased meat products or produce will result in consumers buying more of those products.
What Kroger loses on price margins it can make up through greater sales volume.
Examples of the latest cuts include organic broccoli at $1.79 a pound from a previous $2.69, minipeeled carrots at 99 cents from $1.49, pork ribs at $2.99 a pound from $4.99, and Heritage Farm chicken breast at $1.99 a pound from $2.99.
Also, salmon will drop a dollar to $6.99 a pound, mangoes will drop to 99 cents each from three-for-$5, cucumbers will drop a dime to 49 cents, Campari tomatoes will drop two dollars to $1.99 per package, Zico Coconut Water will drop to $1.99 from $2.79, and Tazo Tea will drop to $1.39 from $2.07.
Ms. Jarrell said Kroger analyzed loyalty card data, customer surveys, and other sources to identify items that are purchased the most and suitable for price reductions.
The chain has installed new signage to identify reduced items, she added.
Last year the cuts focused mainly on fresh produce. This year the reductions emphasize meat and seafood, Ms. Jarrell said.
But Kroger also is cutting prices on natural foods — a fast-growing sales category — and it is trying to close a price gap between conventional and organic produce.
Grocery industry consultant Bill Bishop of Willard Bishop Consulting in Chicago said Kroger likely analyzed its sales and saw that too few customers were buying its meats and produce.
“For some reason, they are not ringing the bell and they need to make a change,” Mr. Bishop said.
Mr. Bishop said Kroger is one of the best at assessing what goes into the average customer’s shopping cart.
“Beef and, to an extent, pork are pretty high-priced these days. In order to ensure they get the full portion of household spending they need to be competitive in those areas,” Mr. Bishop said.
The price cuts for natural foods and organic produce probably were unnecessary, Mr. Bishop said. But by cutting those items Kroger will jump ahead of its competitors on a soon-to-be booming trend.
“Natural products have gone through a migration from being more specialty items to more mainstream items,” Mr. Bishop said. “In the case of organics and natural foods, my guess is that there is an opportunity for them to lead the market in a direction that it’s eventually going to go anyway,” he said.
Contact Jon Chavez at: email@example.com or 419-724-6128.
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