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I saw a headline the other day that made note of Kroger's increase in sales. Actually, the headline was "Discounts and Gas Prices Raise Kroger's Sales."
Before actually reading the story I was high-fiving myself because it was my masterful stroke to make the theme of this year's Meal Solutions supplement (bundled within your poly-bagged September issue) "Let's Go!" "Go" as in getting the shoppers to get in their cars and go to the supermarkets like Kroger and other well-known banners.
"I'm a genius!," I said to no one in particular, but mentally patting myself on the back. My concept is simple enough. Now is the ideal time for supermarkets to get back that "stomach share" they've lost to fast food, QSR, restaurant takeout, restaurant delivery, mall food court, etc. etc. because consumers are feeling the pinch financially at the gas pump and in rising home heating and cooling costs.
Statistics about slowing restaurant sales were proving me right, so I was a bit taken aback when I realized these particular sales at Kroger were not due to people flocking to their stores because of the high gas prices and inherent food shopping values, but these were actual gasoline sales. Petrol. Hot rod fuel. Regular, premium and high octane!
All told Cincinnati-based Kroger Co. now has 2,500 stores in 31 states. Most of them are in the Midwest and West, so I guess it would make sense if you've got big parking lots in all these Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smith's, Fry's and Dillons to turn any unused space into something functional.
But Kroger Co. has 600 of these gasoline centers. That's a lot of parking pavement turned over to gas stations.
I can't tell if this is a sad tale because Kroger ended up with so much unused parking lot space, an indication that the customers had drifted away, or does it mean Kroger has been super-savvy in finding a new, and growing, revenue stream. Of course, revenues from gas would be growing because the price of gasoline has long been rising.
The article (from Bloomberg News) also noted that gasoline sales helped revenue but they also narrowed profit margins. Hmmmmm… does mean that gas has even slimmer margins than food/CPG?
Of course this whole gas thing could, pardon the expression, just blow up. Let's be honest, the supermarket business is notorious for chasing after the "next big thing." I can recall back in the 1970s or so when the better stores started offering banking services. Then there was the whole video run-up. Cookware and dishes made sense, but when they started stocking gloves and socks, well, come on?
Of course, I have never complained about the wine sales in grocery stores, at least in the progressive states that allow it, but that's just sensible…. as in food-and-wine.
I knew the situation had gotten out of control when I was in Jim's Supervalu on Highway 4 in Jefferson, Iowa, a few years ago and I spotted the dollar store aisle.
Sadly, this marketing and merchandising ploy only reinforced that a new dollar store had just opened in Jefferson. Why give up valuable space for food and other household CPGs and clutter it up with this crap, I asked? How much margin can there be on cheap plastic goo-gads, anyway? And why bring attention to this other retail outlet. Don't remind shoppers there is someplace else to go!
The dollar store didn't seem to be really taking off, though. Jefferson prides itself as progressive, Lake Woebegone-type place but its retail stores along its very pretty town square don't exactly thrive. Survive yes, but they don't thrive. Stores along the perimeter blocks adjacent to the square have the parking, but don't rake it in much either.
As I recall the dollar store was either in a new store on the site of a former supermarket or in the building that was once a supermarket a block off the square. I was never really impressed with the amount of cars in its parking lot, but there never seemed to be that many cars in Jefferson's other supermarket either, the Fareway store that was just north of the square.
Well, fast forward to the present. I don't know about that dollar store, but Jim's, with it's sit- down deli, take out counter, flower shop, photo processing, bakery, video rental center, 24 hours of operation (yes, 24 hours in this small town, pop. 4,000—can you believe it?) is no more.
Instead, the plodding, frumpy Fareway store with its real-deal meat counter, bow-tie wearing box boys that actually carry out the groceries, no frills décor and Monday-Saturday store hours only, now occupies a new store on Highway 4 in Jefferson.
I'm not second-guessing the poobahs that run these amalgamated, Wall Street-driven corporate grocery behemoths (I hear there is a pretty long waiting line to do so!), but gee, has anyone thought of just trying to sell more food? It seems to be working for those no- frills people at Fareway.