Grocery Chain Tests Marketing Concept

The New York Times today has an article on how Hannaford Brothers Company, owner of the grocery store chain, used a one-year experiment with a food "healthy" rating system:

The chain, the Hannaford Brothers Company, said that the program had a major impact on steering purchases in the expansive packaged-food section of the store, including cereals, soups and breads.

Not only is this of general interest to any food company, but it's interesting to see a company actually test a marketing concept. In this case, foods got a zero to three star rating. It worked best with packaged foods, less well with meats, and didn't have a lot of impact with produce, most of which got starred ratings.

Kroger Taking Marketshare From Wal-Mart?

Cincinnati-based grocery chain Kroger is actually taking market share in groceries from Wal-Mart, according to a story in the Cincinnati Enquirer. According to some analysis - the article doesn't make it clear who did it, "a recent building binge of supercenters by Wal-Mart not only failed to garner it more market share, but may have led a growing number of shoppers to seek out Kroger's neighborhood shopping approach."

In addition to emphasizing convenience, Kroger is closing the price gap.

A pricing analysis by Bank of America analyst Scott Mushkin last fall found that Kroger's prices were 7.5 percent higher than nearby Wal-Mart supercenters, compared to 20 percent to 25 percent five years ago.

Kroger chairman and CEO said that his company has increased marketshare in 27 of "34 major markets in which supercenters have achieved at least a No. 3 market share." Here's Wal-Mart's statement:

"We continue to grow and have regained position as No.1 on the Fortune 500 list of companies ... We are a No. 1 shopping destination for Americans. New customers continue to go to supercenters, particularly in Ohio."

So what's to learn? Wal-Mart's reliance on a rhetorical response is, I think, telling. There's no way I can know if the numbers that Kroger claims are correct, but logic is on their side, in a way. No company can own all marketshare, and no one approach works everywhere in every category. I'm not sure that consumers would view groceries as a category in which prices are too high, and so might not consider Wal-Mart. Or it could be that people don't like the idea of shopping in a big box environment for all products.