The Kroger Co. (KR) May Gain Higher Market Share With Competitive Pricing And Faster Inventory Turnaround

In a live interview with CNBC, Andy Wolf, from BB&T Capital Markets, speaks about how The Kroger Co. (NYSE:KR) has been reinventing itself as well as gaining market share in the process.

According to Wolf, The Kroger Co. (NYSE:KR), which is one of the biggest old-line supermarkets has been reinventing itself for the last 10 years, which has helped them to bring down their prices and compete with Wal-Mart Stores Inc. (NYSE:WMT). Thus, helping them to gain market share.

He added “When you start to gain market share as a grocer, a lot of good things happen. And really to the point of this interview, your food actually begins to get fresher, because it turns really faster. So, whether you are sourcing it from a local farmer or even across the country, from California to let’s say to a store in, you know, in Florida, if its moving faster in your grocery aisles it is going to be lot fresher and better. So, Kroger now has reached a point where their pricing is actually considered a merit.”

Wolf said that compared to competitors, The Kroger Co. (NYSE:KR) is heading towards becoming an excellent merchant in farm to shelf products because of its pricing since competitors have a higher pricing on products.

According to Wolf, investors are looking for some degree of pricing power, as well as market share and that, is the reason investors prefer Kroger which had got both of these features in it compared to companies like Whole Foods Market Inc. (NASDAQ:WFM), which are reducing prices aggressively to gain market share and which is not good form an investor point-of-view.

Wolf said that his company had given a ‘Hold’ rating on the stock of Whole Foods Market Inc. (NASDAQ:WFM), which is considered as one of the best supermarkets in the country, after they noticed aggressive price cuts, especially on fast moving items, which had huge price cuts up to 15%.

Wolf has given a ‘Buy’ rating on The Kroger Co. (NYSE:KR) with a price target of $56 while the current market price is around $49.

Disclosure: none