Log In | Register
CINCINNATI — The Kroger Co., the nation's biggest traditional grocery store operator, has been cutting prices and increasing promotions to draw strapped shoppers in the recession.
The low prices are taking a toll on profit margins, but Kroger executives say they are an investment that is drawing more regular shoppers who are buying more items each month at Kroger; the pricing will build long-term loyalty, the company says.
David B. Dillon, chairman and CEO, discussed Kroger strategy Tuesday in a conference call with investors about the company"s second-quarter earnings report.
QUESTION: When do we not have to invest (so much) in gross margin to keep customers loyal?
RESPONSE: In this current environment, based on what our customers clearly want, we felt we needed to take some pretty strong positions. I don't think most of us in our working career, maybe none of us, have seen a selling environment quite like what we're experiencing right now. And we're intent on making sure that it turns into a good opportunity for us, for the company, for our shareholders, for our associates and for our customers.
And so, we've looked for ways in which we can effectively spend money that we think will give a return to the shareholders in the long run but will certainly attract the customers in the short run.
