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The Wall Street Journal reports that in a tough economic climate, Kroger may be ahead of the game.

The paper writes, "Kroger, the nation's largest conventional grocer by revenue, consistently has been posting some of the best financial results of any U.S. retailer -- food, drug or other type. And among the big traditional grocers, its prices are the most competitive with discounter Wal-Mart Stores Inc. Kroger began a price-cutting program six years ago, and now that is paying off. In a dreary economy, shoppers are especially attracted by bargains … Another revenue booster at a time of high fuel prices: Kroger offers gasoline discounts to frequent store customers who fuel their cars at its pumps. About 700 of its grocery outlets sell gas.

"The reduced prices have cut into the chain's gross margins -- 23%, compared with 29% at Safeway Inc. But they have helped Kroger woo shoppers and lift sales -- and increase market share."

And, the Journal notes that analysts say that "one of Kroger's big advantages is its partnership with Dunnhumby Ltd., owned by British retailer Tesco PLC. It analyzes data from Kroger customer choices, so the company can better arrange and tailor promotions to shoppers."

KC's View:
While this "Heard on the Street" column is aimed at investors, it also is a pretty good primer on why, in the long run, market share is more important than margin…and that economic hard times are a particularly good time to try to build market share….on the premise that when the economy rebounds, market share will stay consistent and margins can then increase.