The days of gasoline price wars aren't over. They've moved from service stations to grocery stores. "Ten cents is 10 cents. It adds up," said...
CINCINNATI — The days of gasoline price wars aren’t over. They’ve moved from service stations to grocery stores.
“Ten cents is 10 cents. It adds up,” said Vikki Weisbrod, a nurse in suburban Fairfield, Ohio, who often saves $2 on a fill-up of her minivan through a Kroger discount of 10 cents per gallon for frequent shoppers. “It’s convenient, so why not take advantage of a chance to save some money on gas?”
Most of Kroger’s competitors in Ohio markets — such as Giant Eagle, bigg’s, Meijer and Wal-Mart — also have offered gasoline promotions. The gas discounts, usually tied to total shopping purchases or use of loyalty cards, vary in different markets.
The fuel promotions are one of the latest forms of competition in the grocery industry, where traditional grocery chains led by Kroger battle Wal-Mart, Costco Wholesale and other big-box discounters on one side, and upscale specialty food stores such as Wild Oats, Trader Joe’s and Whole Foods on the other.
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Wal-Mart took less than 15 years to become the nation’s largest grocer since its aggressive entry into the grocery business in 1988, and rival Target has complicated matters with its own aggressive expansion of grocery aisles.
“It’s not a simple business,” said Jason Whitmer, food-retailers research analyst at FTN Midwest Research of Cleveland. “It’s not just putting discounts in the weekly circular or giving double coupons.”
Kroger — still the country’s largest grocery chain, with more than 2,500 stores under banners including QFC, Fred Meyer, Fry’s, Smith’s and Ralphs — has rolled out a variety of weapons to battle its multifront competition.
It launched a rewards MasterCard, which awards points for purchases that build up to gift certificates, and expanded use of its customer-loyalty card for promotions.
Some Kroger stores have also added bargain-priced nongrocery items such as televisions, deck furniture or toys, meant to make store visits “like a treasure hunt,” said spokesman Gary Rhodes.
The chain has also expanded to compete with both superstores and specialty grocers. It opened two dozen “Marketplace” stores nearly double the size of its typical stores, selling expanded food offerings and nongrocery goods such as furniture, office supplies, kitchenware and fine jewelry. And it is competing with the specialty food stores with about two dozen Fresh Fare markets, mainly in California, offering natural and gourmet food; and has added no-frills, low-price warehouse stores, called Food 4 Less, in some markets.
“Kroger has been able to experiment more with alternative formats,” said Whitmer, whose company has a “buy” rating on Kroger stock. “They’re definitely ahead of other companies … in becoming more relevant to a broader customer base.”
Safeway is in the midst of a makeover, in which the nation’s third-largest supermarket chain is remodeling stores to give itself a more upscale look. Second-ranked Boise, Idaho-based Albertson’s has tried lower prices on high-volume items, opening Extreme discount stores and slashing costs, but the company has put itself on the market.
Rhodes said the traditional grocers can’t comprehensively compete with Wal-Mart’s prices, but Kroger can “neutralize price” while focusing on better customer service including faster checkout, better food selection, particularly in meats and produce, and by presenting inviting, attractive stores with more amenities.
“The Krogers of this world are working very hard to create a reason to shop in the traditional supermarkets,” said consultant Wendy Liebmann of WSL Strategic Retail of New York. “It’s about food, it’s about what’s for dinner tonight, it’s about ease of shopping.”