Whole Foods and Trader Joe's are often praised for reinventing the grocery business. But Kroger is thriving in a difficult market for grocery stores.
The supermarket chain has reported positive comparable-store sales for 45 straight quarters. Kroger is also expected to surpass Whole Foods Market within two years and become the nation's top seller of organic and natural food, according to a recent report by JPMorgan Chase.
The chain is renowned for excellent its customer service, loyalty program, and extensive selection, Stephen Ward, commercial director of the research and consulting firm Conlumino, said in a note to clients.
Much like Costco and Aldi, Kroger mainly offers private-label products, keeping prices low. The retailer's "strategy of offering more specialty and organic food is helping it overtake other chains despite an industry-wide trend away from supermarkets," JPMorgan analysts write.
Traditional supermarkets have been losing market share to high-end grocers, warehouse chains, and dollar stores because customers are seeking either specialty assortments or great value, according to a recent report by the real estate investment firm JLL. "Millennials and Boomers alike are focusing more on healthy eating choices and creatively prepared meals," the analysts write.
Alternative retailers are taking market share from grocery stores. Selling more organic food will attract high-end customers and help drive profits at Kroger, according to JPMorgan.
Kroger, which has more than 2,000 locations, could also take potential customers from Whole Foods. Whole Foods has 411 locations but continues to expand into new markets.
Kroger has been stepping up sales of organic food. In addition to offering more organic food, Kroger is expanding into affluent markets in Baltimore and Washington, D.C.