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Kroger’s Strategies for Market Share Gains

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Kroger generates market share gains for the 10th straight year

Despite the rising competition in the grocery space, Kroger (KR) registered market share gains for the tenth consecutive year. According to the Nielsen Data Services used by Kroger, the company’s overall market share increased by 60 basis points (or bps) in fiscal 2015 in the markets in which it operates.

Kroger was also the market leader, holding the first or second position, in 42 of the 49 major markets in which it operated. Kroger classifies those markets as major markets in which it operates more than nine stores. At the end of fiscal 2015, it operated in 49 such major markets. Walmart (WMT) was its closest competitor in most of these markets

The year-end dates for fiscal 2015 for these retailers follow:

  1. Kroger: January 31, 2015
  2. Walmart: January 31, 2015
  3. Target: January 31, 2015
  4. Costco: August 30, 2015

Albertson acquired Safeway in January 2015, however, the entity is yet to be listed.

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Market share gain

Market share gain is among the top goals of the company. Kroger follows a disciplined low-cost strategy and works to cut costs from its operations. It generally achieves these cost savings by lowering its product prices, building customer loyalty, and gaining market share.

The retailer is increasingly following the strategy of offering more specialty and organic products in order to compete with other retailers and continue to gain market share. Selling organic food attracts high-end customers and also helps to drive profits. The company is also expanding into affluent markets in Baltimore and Washington, D.C.

ETF exposure

Due to their product orientation, Kroger (KR) and its peers Walmart (WMT), Whole Foods (WFM), and Sprouts Farmers Market (SFM) are included in the portfolio holdings of the SPDR S&P Retail ETF (XRT) and account for ~4.1% of the index weight.

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