Kroger stocks personal finance in grocery aisles to drive store traffic

CINCINNATI — Weekend grocery shopping list:

Milk, on sale at four half-gallons for $5.

Cookies, two packages-for-one at $3.99.

New $200,000 fixed-rate mortgage, 30 years at 6.2%.

Kroger Co., the nation's largest traditional grocery chain, has been quietly but steadily expanding its financial services business since beginning with a Kroger credit card three years ago. Stores now market mortgages, home equity lines of credit and a just-expanded set of half a dozen insurance coverages from identity theft to home and life policies.

The company, which owns the Ralphs grocery chain in California, has been broadening its offerings at the same time as rival Wal-Mart Stores Inc. is expanding its financial services business. Kroger sees its services not as big moneymakers, but as a good way to increase traffic and customer loyalty.

"It's about driving more people to the store and bringing them back," said Kathy Kelly, president of the Kroger Personal Finance division formed in 2004.

The grocery chain, which had $66.1 billion in total revenue last year, reaps fees for the services provided in partnership with conventional banks and insurance companies. Kelly wouldn't disclose specific numbers but said that the services offered were usually priced in the middle to lower end of market averages.

For consumers, they're a convenience, if surprising to find from their grocer, which so far markets them mainly in store displays and brochures.

One of Kroger's initial offerings was pet insurance, through Jeffersonville, Ind.-based PetFirst Healthcare. Wayne DeLancey of Parkersburg, W.Va., was passing the time while his wife was shopping when he spotted the Kroger rack with brochures about its financial products.

He read through one on pet insurance and signed up Blu, their 5-year-old Siberian husky and German shepherd mix.

"I told my wife if this thing does what they say, this is a pretty good deal," DeLancey recalled.

For $24.95 a month, most of Blu's health-related expenses are covered, including 90% of a recent tumor removal.

"We're real happy with the coverage. I'm glad Kroger did this," he said.

Wal-Mart, which sells groceries nationwide in its Supercenter stores, this year dropped a bank license application that drew opposition from critics who said having a bank would give the world's largest retailer too much economic power. But Wal-Mart is adding a new prepaid Visa debit card to its branded credit card and other money services while planning to increase more than fourfold the number of MoneyCenter alcoves in stores.