Kroger's large-format store roll-out is heating up. Will this help it compete against the Safeway-Albertsons merger?
Grocery retail giant Kroger will have 110 large-format stores
by the end of this year, only a fraction of its total 2,640 stores in 34 states, according to Cincinnati.com.
According to the report, analysts are predicting that Kroger could build approximately 200 more large stores
within a few years. However, Kroger has not made any direct statements specifying its plans.
How much bigger are Kroger's large-format stores? According to the report, the company currently operates 11 stores
that are over 100,000 square feet
. The average size of its stores has been increasing since the company first began.
Wal-Mart has built more than 3,200 supercenters in the U.S. Recently, the company has expanded its smaller-format stores, called Neighborhood Markets, which are about a quarter the size of typical supercenters. Last year, Walmart opened 122 Neighborhood Markets and only 72 Supercenters.
Analysts are saying that Kroger is using a different strategy, emphasizing a broad selection of food with some additional general merchandise, unlike Wal-Mart and Target which are first and foremost general merchandisers.
"Yes – Wal-Mart has huge stores, but only 40,000 to 50,000 square feet of that is food
, so Kroger has a much bigger, fresher selection and the price is close," said Howard Davidowitz, chairman of New York retail consultant Davidowitz & Associates.
Kroger's share price is up more than 33% since this time last year.
The hugely successful retailer obviously knows what it's doing. It remains to be seen how many large-format stores will be rolled-out, but so far they seem highly capable of remaining profitable.