Like pretty much everyone else who has been paying any attention, Kroger CEO David Dillon knows that Wal-Mart Stores plans to drop prices on a lot of items as it seeks to regain a competitive edge that it has seemed to lose in recent quarters.
While Mr. Dillon is usually quite reserved when it comes to commenting on competitors, he seemed to deviate some yesterday when he told the Citi Retail Conference in New York that he likes his company's chances against Wal-Mart, price rollbacks and all.
"That business model is in sharp contrast to the business model that we're carving out at Kroger," Mr. Dillon said. The Kroger business model, according to an Associated Press report, is clean stores with quick checkouts, well-trained store associates focused on customer service and a broader selection of products.
"We think we stand out in those three keys, and we think we will stand out even more as years go on," Mr. Dillon said. "I think that does distinguish us from Wal-Mart, and I think there's plenty of room for our success, even with their success."
For its part, Wal-Mart is pretty confident in its strategy, as well. Company spokesperson Linda Blakley, told the AP, "We're making it easier than ever to save by offering thousands of rollbacks on the things families need every day -- including staples in our grocery aisles. Mom will hear the message loud and clear through advertising and in-store programs that start now and will increase in intensity in the coming weeks."
Kroger's Dillon believes the company is already seeing signs that its strategy is spot on. He said the company is adding more "loyal households" who spend more in Kroger's stores.
He also said there are signs that consumers are becoming more confident and spending more on items such as flowers, jewelry and wine. "We think that's a direct result of people feeling they can spend some discretionary money," he said.
Discussion Questions: Do you share David Dillon's opinion that Kroger stands out now from the competition and that it will do so even more in the future? What do you see as the company's greatest strengths and vulnerabilities?