Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
How come Kroger hasn't seen the market share losses that other traditional grocers have reportedly seen through channel shifts in consumer spending? David Dillon, Kroger's chairman and CEO, believes it's because the company takes a different view of who its competitors are versus other grocers.
"We look where our customers spend their money," Mr. Dillon said on a recent conference call in response to an analyst's question on the topic. "And because we look at it that way, our battle has been for a market share of that bigger pie."
The analyst particularly wondered how Kroger's own "value proposition" and incentives, such as fuel deals, had averted the company from not only losing customers at the "bottom end" to low-price competitors but also at the "top end" to limited-assortment chains.
The question came after Mr. Dillon bragged earlier in the call that Kroger had achieved an industry-leading 33 consecutive quarters of positive identical supermarket sales results. He credited the company's Customer 1st strategy's "relentless focus" on four keys: people, prices, products and shopping experience.
Addressing the analyst's question, Mr. Dillon said the Customer 1st focus was developed in the nineties after management recognized that the grocer had become fixated on "just producing earnings" and wasn't customer-focused enough.
"We've talked a lot about it, and it sounds more like marketing words, but actually, we genuinely mean it," said Mr. Dillon. "We look at the four elements of Customer 1st. We invest in those in the ways that we believe are meaningful to our customers. We save money in places that don't matter to the customer and reinvest it in the places that do. And I think it's that approach that has created the results that you described. I would agree with your viewpoint, we think we have not suffered the same channel changes that others have, but we've had to live in the same channel changes that others have had to live with. And we just had to address it in a different way."
He also implied that food retailing had changed dramatically over the last 15 to 20 years.
"The grocery industry as we all grew up in it really doesn't exist anymore," said Mr. Dillon. "We don't think of that as our industry. We don't have a real good name for it other than food, but it is a broader industry than just the traditional food industry."