The Kroger Co. (KR), The Fresh Market Inc (TFM): Whole Foods Market, Inc. (WFM) Moves Beyond Organic

The Kroger Co. (NYSE:KR) also recently acquired Harris Teeter Supermarkets and its 212 stores located in Southeastern and Mid-Atlantic markets. The transaction is expected to be accretive to diluted EPS by $0.06 to $0.09 in the first full year after the merger minus expenses. Long-term EPS growth is estimated at 8% to 11%. With a larger scale, The Kroger Co. (NYSE:KR) will be better able to achieve its planned annual cost savings of $40 million to $50 million over the next three-to-four years .

A more direct competitor to Whole Foods, The Fresh Market Inc (NASDAQ:TFM), maintains its focus on providing customers with “affordable luxury” by offering premium products in its smaller stores. Chief executive officer Craig Carlock finds customers are responding well and the company is focused on expanding its number of stores.

In its outlook for 2013, The Fresh Market Inc (NASDAQ:TFM) expects to open 19 to 22 stores, with four- to-six stores opening in the second quarter and 13 to 15 new stores launching in the second half of the year. Growth plans should result in capital expenditures in the range of $130 million to $150 million .

My foolish conclusion
Whole Foods Market, Inc. (NASDAQ:WFM)’ strategy of lowering its prices and altering its product line to attract less-affluent consumers should help the company expand its customer base. As more customers are exposed to organic- and natural-food options and are persuaded to buy them, prices between these products and more conventional food products should level off.

This can make price competition between grocers less relevant and they may turn their focus to other areas, like customer service or select product and service offerings. The competitive food-retailer space will continue to evolve as food and health trends alter consumer-buying habits.

The article Whole Foods Moves Beyond Organic originally appeared on Fool.com and is written by Eileen Rojas.

Eileen Rojas has no position in any stocks mentioned. The Motley Fool recommends The Fresh Market and Whole Foods Market. The Motley Fool owns shares of Whole Foods Market.

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