CHARLESTON, W.VA.--Kroger Co.'s decision last Friday to close two of its underperforming West Virginia stores — including its Quincy Center location — was just the latest action taken to address a fiercely competitive retail environment.
The fact that the Diamond store had been operating in the red since the Quincy Walmart opened nearby in 2011 further underscored the company's need to better position itself in the market.
Walmart's aggressive entry into the grocery space has forced retailers to tighten their belts and find better ways to compete.
The state saw Kroger take one of its first moves to go head-to-head with the Bentonville, Ark.-based behemoth last May when Kroger stores switched from the promotional/discount price model — a longstanding feature of the grocery industry — to a more Walmart-esque everyday low price system.
Kroger also recently completed its acquisition of the Harris Teeter supermarket chain, which is designed to give the company a chance to expand its footprint into high-growth markets in Deleware, Florida, Maryland and Washington.
For the first three quarters of last year, Kroger seemed to be pleasing Wall Street with its strategy. It's stock rose nearly 70 percent during the first three quarters of 2013.
But in the fourth quarter, the company began seeing economic headwinds. Company executives said in December they began seeing a "bifurcated" economy following the October government shutdown and cuts to SNAP benefits.
The company said growth in the high end of the market continued to be strong, while the low end and value sector lagged. Since mid-October, the company's stock has fallen back by about 16 percent.
Analysts at Zacks Equity Research in December warned the company would likely have to tighten its belt in some areas.
"The intensifying price war among grocery stores to lure budget-constrained consumers may adversely impact the company's sales and margins," analysts said.
"The recent economic downturn has transformed the way consumers used to shop. Cash-strapped consumers are now prioritizing their purchases, choosing cheaper substitute brands and shopping for groceries at low-price leaders."
Kroger is also rolling out a new marketing strategy next month. Beginning March 5 it will begin running weekly newspaper sales insert on Wednesdays instead of Sundays.
The company hopes that by switching to a Wednesday through Tuesday sales week, it can capture more shoppers who plan their weekly grocery shopping during the week prior to a Friday payday.
It will be interesting to see if other retailers change their weekly sales calendars to follow suit.
One non-food retailer to watch out for is Radio Shack.
Despite entertaining Americans with a self-deprecating Super Bowl ad — and yes, that really was Mary Lou Retton — the Wall Street Journal reported Tuesday the company is planning to close 500 of its 4,300 stores as part of its corporate restructuring.
The report came out two days before former Dollar General Corp. vice president took over as company CEO.
As of Friday, Fort Worth, Texas-based Radio Shack had not responded to the Journal's report.