Anne Marie Sablock said she regularly drives past an Albertsons, a Whole Foods Market and several other supermarkets to shop at the Ralphs on Pacific Coast Highway in Long Beach.
The Seal Beach mother of two teens is price sensitive and likes a broad selection of goods. She buys house brands and private label products.
"I shop here because there is more choice and better prices," Sablock said as she dropped a box of Ralphs brand instant oatmeal into her cart last week.
Times are tough for neighborhood supermarkets as cost-conscious consumers defect to Wal-Mart, Costco and other discounters. But Kroger Co., owner of the Ralphs and Food 4 Less chains, seems to be bucking that trend.
Kroger posted same-store sales growth of 5% in the latest fiscal year. That compares with growth of less than 1% for Vons parent Safeway Inc. and a 1.2% decline for Supervalu Inc., parent company of Albertsons (excluding fuel sales for all three).
Industry analysts say Cincinnati-based Kroger's success is probably tied to its efforts to attract bargain hunters, aided by its exhaustive electronic tracking of customers' shopping patterns and a push into marketing house brands.
"Kroger is the best-positioned traditional food retailer in a weak economic environment based on its aggressive pricing and strong market share positions," said Joseph Agnese, a Standard & Poor's equity analyst.
Much of Kroger's recent success can be attributed to a tracking system that identifies how often shoppers visit the store and provides the company with detailed information about what they buy, Kroger Chief Executive David B. Dillon said in an interview.
Developed by Dunnhumby, a British marketing company that also is working with the Macy's department store chain in the United States, the system gives Kroger clues as to what types of promotions and specials will draw people back into its stores.
"We send our very best customers coupon books specifically targeted at what they actually buy. The redemption rate of these coupons is significantly higher than other coupons," Dillon said.
Kroger uses the data to divide the stores of most of its chains into three tiers, and stock them accordingly. The upscale Ralphs store, for example, will have a larger wine selection and won't offer the lowest price "Value" private label goods. A mainstream Ralphs will have a broad mix of goods at varying prices points, while the value store "will be much more focused on price," Dillon said.
