retail news in context, analysis with attitude

Reuters reports that Kroger is saying that increased sales to its best customers suggests that “ it is more competitive with Walmart and other food sellers after cutting prices and reducing checkout wait times.”

CFO Mike Schlotman told Reuters in an interview yesterday that the company is focused on “keeping its gross margin dollars flat rather than focusing on keeping gross margin rate flat,” a move that is seen as being better for shoppers than for stockholders, who “would rather see its margin rate improve at a faster clip.”

The CFO also says that “another goal has been to reduce wait times in checkout lines. Changes as basic as scheduling more employees to work at the cash registers at what are usually busy times, along with in-store televisions broadcasting secret codes, have helped Kroger now measure wait time improvements at most stores in seconds, rather than minutes.”

The result, he says, is that “Kroger gets about 50 percent of its best shoppers' total spending on food, excluding purchases made at restaurants. Recently, that rate has increased about 1 percentage point a year.”
KC's View:
The line that I think is most important in this story is the one saying that “moves taken during the 1990s to please shareholders led to the grocer losing its relevance with shoppers, Chief Executive David Dillon said.” Which means that the company is now focusing on pleasing customers, figuring that improved relevance will lead to improved sales, and eventually the stock price will take care of itself.

Too many retailers over the years have worried about Wall Street first and Main Street second. Pretty much always a mistake, I think.