Whole Foods' worst nightmare? Kroger (Columbus, Cleveland: stores, Walmart, company)

[PerryMason614]

Originally Posted by Renownedtheworldaround

I think Kroger has slightly more of a blue collar following/reputation than Publix, but both have overlapping customer bases. Outside of Florida, Publix is seen as a pretty upmarket grocer (much like Harris Teeter, who it often gets compared to).

I

I think all the tourists see the glitzy new Publix stores when they go down south on vacation and they think Publix is something special, but it really isn't. And when you go to their newer markets, their store base is relatively new so it's easy to make the same mistake.

It's the shiny new car syndrome. There was a mystique about Macy's back when it was a glitzy store from one of the capitals of fashion. Now that it's in every podunk 50 year old mall anchor store in the midwest, it's not quite as glitzy to people anymore.

If you talk about Giant Eagle being upscale to someone in Pittsburgh, they will laugh at you. But in Columbus that's where the good looking women and the Target-type shoppers seem to go because they have a newer store base and their locations are in the right spots for that kind of customer. I think the same thing is going on with Publix.

[PerryMason614]

Also: Florida is very profitable for Publix. They are able to use all the profits they make there to fund their expansion to other markets. KROGER'S MARKETS! IMO, Kroger should take a controlling interest in Winn-Dixie/BI-LO/Southeastern Grocers, say about 40% (so that what happens there doesn't affect Kroger's financials and stock price), and start turning up the heat on Publix.

[jean_ji]

We ordered food from a Kroger's deli in southern IN after my Dad's funeral. The next day after we picked our order up, we were in that Kroger's again, passing by to get to another department, when the women behind the deli called out and asked us how it had gone and if we were happy with the food. Seriously nice people and a well stocked store.

We shop Publix in FL and putting the glossiness of their new stores aside, their management knows customer service. I feel like a valued customer when I shop there as I do with Krogers. Great food selection and prices are important but if the employees are not trained in customer service, I tend not to return. Whole Foods is nicknamed Whole Paycheck for a reason and their employees have been lackluster at the stores I've been in.

[PerryMason614]

Originally Posted by jean_ji

We ordered food from a Kroger's deli in southern IN after my Dad's funeral. The next day after we picked our order up, we were in that Kroger's again, passing by to get to another department, when the women behind the deli called out and asked us how it had gone and if we were happy with the food. Seriously nice people and a well stocked store.

We shop Publix in FL and putting the glossiness of their new stores aside, their management knows customer service. I feel like a valued customer when I shop there as I do with Krogers. Great food selection and prices are important but if the employees are not trained in customer service, I tend not to return. Whole Foods is nicknamed Whole Paycheck for a reason and their employees have been lackluster at the stores I've been in.

I agree. My point wasn't that Publix is bad and Kroger is good, or vice versa. I think both are good, but Publix is a bit overrated. It's just another grocery store, in my opinion. A well-run grocery store, no question. But it seems pricier than Kroger.

Speaking of which, I was at Walmart the other night. I virtually never shop there for groceries but I noticed that some of their prices are going back to being dirt cheap again. A dozen extra large eggs for $0.62, milk for $1.68! For a long time Kroger has been at or cheaper than Walmart's prices, but it looks like Kroger is going to have to do some price cutting again.

I also try to play this little game in my head of trying to figure out which suppliers are the same from store to store. I think I just figured out that Walmart's private brand dairy and Meijers private-brand dairy come from the same place. The cottage cheese is the same, and they both have strawberry cheesecake ice cream, something not carried by most of the other stores.

I'm sure motorman's head just exploded because I mentioned Walmart and Meijer.

[WILWRadio]

Never been to a Public. Have not been down South in many years.

Kroger stores almost always have well trained staff that know something about Customer Service. Prior to moving here I shopped at Marsh, Kroger and Meijer in the Indianapolis area. Eventually I gave up on Marsh because so many of the store clerks were rude, snotty or indifferent about handling simple requests or questions. About the only thing I ever do in a store is ask someone where to find something. Had to do it this morning at the Kroger in the Latonia section of Covington. Got good service. Same can be said for Meijer when I've shopped there. I'm not shocked to hear that Marsh is going under. In my opinion, the pool trained service staff and not the higher prices did them in.

[PerryMason614]

Originally Posted by WILWRadio

I'm not shocked to hear that Marsh is going under. In my opinion, the pool trained service staff and not the higher prices did them in.

Being in radio, I'm sure you're well versed about what has happened to Clear Channel. But most people don't understand the mechanics of how this works.

Bankers buy companies and plunge them deeply into debt. Bankers try to keep these companies running at least until they can pull out their investment either through more loans or through management fees and usually they do get their money bank. They squeeze every last penny they can because their first order of business is to get their investment back.

Some of these deals work out and the company turns around. A lot of these deals tend to go south because of all of their debt. The bankers usually get their money back either way. They just don't make as much when a company liquidates.

That's what essentially happened to Marsh. Some private capital company bought the company and kept milking it until they got their money back. And as part of that, the employees get squeezed. When you squeeze employees too much, the good people move on and those who remain stop caring about their jobs. And then the stench of death over a company makes things even worse. Kmart and Sears are other examples of this.

I don't blame the bankers. Once they buy a company, it's theirs to do with as they please. But these deals are what is incentivized in our economy so it shouldn't surprise people. No incentive to build -- the incentive is to strip mine what's already there.

Sounds like Whole Foods is in the early stages of that spiral.

[Renownedtheworldaround]

Originally Posted by PerryMason614

I agree. My point wasn't that Publix is bad and Kroger is good, or vice versa. I think both are good, but Publix is a bit overrated. It's just another grocery store, in my opinion. A well-run grocery store, no question. But it seems pricier than Kroger.

It's basically what I think, too. Publix may market itself to a slightly higher end customer, but both chains are similar in many ways.

And as far as Southeastern Grocers is concerned, I think Kroger should leave them alone. Winn-Dixie has been getting their butt kicked in Florida (Publix and Walmart control over 75% of the Florida market) and Bi-Lo is starting to lose relevancy in South Carolina.

[PerryMason614]

Originally Posted by Renownedtheworldaround

And as far as Southeastern Grocers is concerned, I think Kroger should leave them alone. Winn-Dixie has been getting their butt kicked in Florida (Publix and Walmart control over 75% of the Florida market) and Bi-Lo is starting to lose relevancy in South Carolina.

That's why I was thinking they should only own a minority controlling interest. They could use Southeastern to attack Publix on its home turf. If they are able to turn them around, great. If not, it wouldn't affect their balance sheet or income statement.

My impression is that as long as Publix gets to charge high prices in Florida and remains unchallenged, it has a money machine that allows it to expand to wherever they want. Kroger has a strong enough program that by "Krogerizing" Winn-Dixie they might be able to turn it around. But what do I know? That's what it seems like to me, though.

Imagine what all the snowbirds will start thinking once Kroger private label brands start showing up inside Winn-Dixie!!!

[Wilson513]

I did a little research on this and I now understand it. Publix builds in demographic areas of higher income. Krogers slightly lower. Krogers midwest concentration is the cause of this.

But, Public gets far more Hispanic and African American shoppers who buy more due to dramatically different family size demographics, but they buy cheaper, less nutritious foods.

So while Kroger sells a fresher, greener product line, they fall behind Public due to store location demographics.

[PerryMason614]

Originally Posted by Wilson513

I did a little research on this and I now understand it. Publix builds in demographic areas of higher income. Krogers slightly lower. Krogers midwest concentration is the cause of this.

But, Public gets far more Hispanic and African American shoppers who buy more due to dramatically different family size demographics, but they buy cheaper, less nutritious foods.

So while Kroger sells a fresher, greener product line, they fall behind Public due to store location demographics.

Remember, the market incumbent has a lot of legacy locations that are cheap to operate and make a profit, so they keep those stores open. But you would never go into a new market to operate a store like this one in Wellston, Ohio:



Kroger had an even junkier store in Glouster that has since been replaced.



It still runs this store in McConnelsville.



There are still a handful of these kinds of stores in West Virginia, Missouri and Illinois. The fact that Kroger can run a store like this as well as one that's 150,000 square feet and make money in both of them is a tribute to Kroger management.

Giant Eagle has these kinds of stores in Youngstown, Pittsburgh and to a certain extent in Cleveland. But they were able to start from a blank slate in Columbus and basically follow the Publix strategy. They took the best Big Bear stores, and built new in only the nicer areas.

In Indianapolis, Giant Eagle's first store was in Carmel. Now look for them to be taking over a bunch of the best Marsh locations.