Dive Brief:
- Kroger is lowering prices on thousands of products at its Pick n' Save, Metro Market, and Copps stores in Wisconsin, which are part of its Roundy's division. This comes after the company remodeled dozens of its Metro Market stores, according to the Journal Sentinal.
- So far, the company has invested about $250 million in Wisconsin since its acquisition of Roundy's in 2015. It is currently the market share leader in the state
- Discounts will appear on eggs, milk, lettuce heads, bananas and bread, among other products. The Journal Sentinal noted that the price of a gallon of 1% Roundy's Select milk dropped from $1.99 to $1.79 at one store.
Dive Insight:
Kroger has invested a lot of money in store updates at its Upper Midwest stores, and now it wants to come in and see it's progress — and hopefully stick around.
The Wisconsin grocery market is extremely competitive, with more than 400 independent grocers in addition to chain operators. Kroger currently owns approximately one-third of the state’s grocery market due to its acquisition of Roundy’s, which includes its Copps, Metro Market and Pick n’ Save stores.
The grocer is facing extreme price pressure from Amazon Prime discounts at Whole Foods, which are driving additional traffic to stores, reports note. Its biggest threat in the Upper Midwest, however, might be Aldi, which last year announced a $37 million remodeling project in the Milwaukee market. The discounter is in the midst of building new store and updating current ones around fresh, on-trend products, and recently announced plans to rotate in scores of new private label products.
In order to compete in the Wisconsin area where consumers are price sensitive, Kroger must lower its prices. Although the grocer’s profit margins will shrink, the company is betting on making up for it by bringing in more new customers and deepening loyalty among current ones.
The grocer has been investing a lot of its time and resources into technology and e-commerce measures. It added its ClickList curbside pickup to 50 Wisconsin stores and offers delivery from more than three-quarters of its locations in the state, with plans to bring more stores online over the coming months. It's also testing driverless delivery, acquired meal kit company Home Chef and is rolling out its EDGE digital shelf displays to 120 stores by the end of this year. In order to streamline its e-commerce platform, Kroger signed an exclusive deal with Ocado to create automated warehouses for the grocer.
Kroger is currently the third largest retailer by sales in the world behind Walmart and Costco, and second largest in the U.S. behind Walmart. By asserting itself in the saturated Wisconsin grocery market, Kroger is sending a signal to its biggest national competitors that it will continue to fight in key regions across the country.
