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Kroger’s CEO Says Combo Stores
Are Best Response To Tesco Threat

David Dillon, Chairman & CEO of The Kroger Co., along with Kroger’s Senior Vice President & CFO Michael Schlotman, gave a presentation at the Tenth Annual Retail Conference sponsored by Lehman Brothers. Always an interesting presentation and, particularly, the Pundit found intriguing Mr. Dillon’s response to a question about Tesco’s new Fresh & Easy Neighborhood Market format, which we have dealt with extensively.

Kroger has some specific experience in this matter as it operates a range of formats from giant supercenters, such as Fred Meyer, to small convenience stores, such as Turkey Hill and Tom Thumb.

Mr. Dillon’s take on Tesco was that, although convenience is important to consumers, the definition of convenience is problematic. On the one hand, as Tesco has identified, being a “neighborhood” store is important, and being convenient along the customer’s travel routes means a lot.

However, even the most conveniently located store is not convenient to the consumer if it doesn’t have the variety of products that the consumer wants.

So, after having operated this broad range of stores, Mr. Dillon spoke up in favor of Kroger’s “combo store” or main supermarket model as the most convenient.

He pointed out that in planning stores, Kroger assumes that a combo store will only draw from a two to three mile area. So combine that small range with the large variety of a full line food and drug store and, Mr. Dillon believes, you have the most compelling and convenient format.

This might be dismissed by Tesco as a CEO defending his turf. Interestingly enough, though, Kroger partners with Dunnhumby to get its consumer insight. This is the same company that Tesco partners with in the U.K. for the same purpose. Maybe they tell Mr. Dillon things they don’t mention when they are on the other side of the pond?

No video or slide show, but you can hear the audio on the presentation right here.

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