Wal-Mart Threatens to Cast Shadow on Kroger

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Apr 08, 2002
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Kroger executives no longer view Wal-Mart as only a remote threat, reports the New York Times. While Kroger spent more than a year completing the eight-billion-dollar deal for Fred Meyer of Portland, Ore., Wal-Mart Supercenters gained a huge price advantage, selling groceries 30 percent cheaper on average, according to the Boston Consulting Group research firm.

To attract shoppers, Kroger cut prices in December, sacrificing near-term sales and earnings growth in a shift that surprised Wall Street. It sounded like the start of a price war, and the stock prices of grocery companies fell.

Moderator Comment: Does Fred Meyer give Kroger the
means to compete with the supercenter formats of Wal-Mart and Target?

We’ve been wondering for awhile now why Kroger hasn’t
been more aggressive opening Fred Meyer units to take the supercenter competition
head-on. Having been to both, we would prefer shopping at a Fred Meyer’s before
a Wal-Mart supercenter. [George
Anderson – Moderator
]

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