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The Cincinnati Business Courier reports that one investment analyst is suggesting that Kroger "is so big that it has pricing power over its competition and can wait out the current tough pricing environment" that has been created by deflation in so many categories.

“Kroger is going for volume over margins,” says Andy Stout, managing director of investments at Simply Money. “They’re playing the market share game.” The story notes that "Kroger’s same-store sales growth was 5.4 percent in the third quarter last year, but it had dwindled to just 1.7 percent in this year’s second quarter. Kroger is still on an industry-leading streak of 51 straight quarters generating same-store sales growth."

The Courier writes that "the idea is to keep sales volumes high and rising even with pricing tight and margins squeezed thanks to food price deflation and price wars with Wal-Mart and others. When the tide turns and prices come back up, Cincinnati-based Kroger will already have the customers and sales in place so its profit margins could quickly return."
KC's View:
A consistent refrain I've heard recently when chatting with top industry executives has been how tough food deflation is making it on them; it creates enormous challenges in terms of numbers, and companies have to make tough choices in terms of short-term issues (like staffing) and long-term priorities (like acquisitions) because of the issue.

There are some enormous advantages that Kroger has because of its size. And I think it is really smart to play the market share game whenever things get tough ... because when things get better, it gives the company are much more stable foundation upon which to build.