Kroger enjoys an advantage of scale, meaning it saves on costs dues to the volume of sales it generates. The established presence is tied to strong brand equity. Their presence means they do not have to face the same struggles as new entrants. Kroger also is a strong differentiator and offers brands that are only exclusively sold in their brick and mortar store locations. Kroger also attracts many customers with over 1,000 fuel centers that are tied in to a rewards program (2016 Form 10-K, p. 12). However, Kroger does have its disadvantages. These include the fact that they are forced to be more promotional in order to out-sell lower-priced competitors. This reduces profitability for the corporation. Specifically, Kroger cannot match Walmart’s
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Kroger also faces higher labor costs and increased labor risks than the three competitors in this analysis (Walmart, Target, Walgreens) due to the presence of a union, which none of the other three competitors must deal with (2016 Form10-K, p. 4).
Kroger is also the owner of a large amount of debt. So high is their debt, that their debt/equity ratio is 2.37 times the size of the next closest competitor mentioned here (Target) (2016 Form 10-K, p. 5). The debt/equity ratio represents how much debt a company is using to fund its assets relative to the amount of equity it has. For Kroger to have that much higher of a debt/equity ratio than its nearest peer is troublesome. Walmart has fuel centers of their own that counteract Kroger’s fuel centers (2016 Form 10-K, p. 8). Walmart has a large online presence that Kroger has not yet been able to match as well. One edge Kroger does hold over Walmart is the fact
Kroger also faces higher labor costs and increased labor risks than the three competitors in this analysis (Walmart, Target, Walgreens) due to the presence of a union, which none of the other three competitors must deal with (2016 Form10-K, p. 4).
Kroger is also the owner of a large amount of debt. So high is their debt, that their debt/equity ratio is 2.37 times the size of the next closest competitor mentioned here (Target) (2016 Form 10-K, p. 5). The debt/equity ratio represents how much debt a company is using to fund its assets relative to the amount of equity it has. For Kroger to have that much higher of a debt/equity ratio than its nearest peer is troublesome. Walmart has fuel centers of their own that counteract Kroger’s fuel centers (2016 Form 10-K, p. 8). Walmart has a large online presence that Kroger has not yet been able to match as well. One edge Kroger does hold over Walmart is the fact