Kroger reinvests in Smith’s as profits climb

With a better-than-expected year and a positive outlook, Kroger Co. is reinvesting in its Smith’s Food & Drug division.

While Kroger’s same-store sales, or sales at stores open at least a year, are expected to rise by 2.5 percent to 3.5 percent this year, the company has implemented new technology and lowered prices throughout all Smith’s stores. The company is looking to shore up its customers’ loyalty while it continues to gain strength in the competitive grocery industry.

“Our sales are robust and our customers seem very satisfied. So we’re reinvesting in Las Vegas,” said Marsha Gilford, Smith’s vice president public affairs. “We’ve reinvested profits and lowered prices throughout the stores.”

In March, Kroger reported a year-end net profit of $1.4 billion, up 5 percent from the year prior.

In late April, competitor Safeway Inc., which owns Vons stores, noted it follows a similar strategy of keeping prices low and sacrificing profit to do so. Safeway CEO Steve Burd said in a statement that more customers are signing up for the program, but during the quarter, the company’s gross profit as a percentage of sales fell largely because of “investments in price,” or lower prices.

At Smith’s, the brand’s new pricing program complements other incentives. Starting Friday, customers can earn double fuel points on every weekend shopping trip and save up to $1 off per gallon at Smith’s Fuel Centers. Vons, too, has a smiliar gasoline promotion.

“Our stores are doing very well. Las Vegas is a great market for us,” Gilford said.

Supermarket analyst David Livingston said that, overall, Smith’s is probably a little below average in terms of the heirarchy of the current supermarket industry. As it stands now, the leaders are WinCo Foods, Wal-Mart, Trader Joe’s and Whole Foods. Traditional stores such as Smith’s, Vons and Albertsons fall somewhere below those four in terms of their industry strength.

On average, Smith’s customers are waiting in checkout lines for 30 seconds through the use of infrared laser technology that is coordinated with in-store software. The heat-sensitive cameras interpret shopping time required, which then prepares the store to have the appropriate number of check stands open to reduce customers’ wait time. The process has taken Smith’s about 18 months to implement and see reduced waits.

“The way I understand it, this new technology is helping shorten wait times to about 30 seconds,” Livingston said. “And they’ve been increasing their business because people like the shorter wait times.”

Gilford said no employees were hired or laid off as a result of the tech, but associates did have to be trained in a process on how to get customers through the lines quickly.

“Our industry is in continuous change,” Gilford said.

Smith’s also has an app for Android and iPhone, and like Vons, customers can load coupons on to their shoppers’ loyalty card via the Internet. Smarter customers and changing expectations mean stores need to adapt, Gilford said.

“We know that when customers shop they enjoy strolling the aisles, but when they check out they want to check out as quickly as possible,” Gilford said.

Smith’s employs 15,600 people in 131 stores throughout seven Western states. In the Las Vegas area, there are 30 Smith’s stores. No new locations are planned locally, but the store at 830 S. Boulder Highway received a $1.7 million remodeling, which was unveiled mid-May.

“You’ve always got to keep an eye on underperforming stores, so sometimes changes need to be made. But at this point I’m not aware of any closures,” Gilford said. “We’re super happy with what’s happening in Las Vegas, and our customers seem to be really satisfied with us.”

Contact reporter Laura Carroll at
lcarroll@reviewjournal.com or 702-380-4588.
Follow @lscvegas on Twitter.

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