If anyone had hoped that Kroger might change its mind and reinstate double coupons in areas where it’s eliminated the practice, think again. The nation’s largest supermarket chain is doing away with doubles in yet another region, after its latest earnings report indicated that it’s doing just fine without them.
The next domino to fall is Kroger’s Delta division, which encompasses the Memphis, Tennessee area, Arkansas, Mississippi, western Kentucky and southern Missouri. Kroger stores there will be introducing “New Lower Prices” starting with the new weekly ad this coming Wednesday, June 26th and will no longer double coupons after July 10th.
“We recognize this change might be an inconvenience for some shoppers who relied on the double coupons, but we feel lowering thousands of prices on everyday products will provide more value for all customers,” said Joe Bell, the manager of marketing and public affairs for Kroger’s Delta Division, in a news release.
The move follows similar changes made in other Kroger regions, starting with its stores in Texas and at Kroger-owned Ralphs back in 2011. But the practice accelerated this year with the elimination of double coupons in the Cincinnati/Dayton Division (read: “Kroger Offers New Lower Prices! Oh, And No More Double Coupons”), the Mid-Atlantic Division (read: “Another One Bites the Double-Couponing Dust”) and now the Delta Division. Many analysts and shoppers have assumed that announcing new lower prices, and eliminating double coupons to help pay for them, will eventually become the new normal in all Kroger divisions. Kroger is not confirming or denying that, but it would surprise virtually no one at this point.
Why the change? Kroger has spoken out of both sides of its mouth, to an extent, in explaining its decision. On the one hand, Kroger claims that few shoppers take advantage of double coupons anyway. On the other hand, eliminating that little-used perk apparently provides so much cost savings, that the chain can afford to invest in lower prices across the board instead.
But the real reasons for the change are a little more complicated. As explained in an earlier article, Kroger believes that lowering prices will help it retain and attract more loyal customers than would be driven away by eliminating double coupons (read: “The Real Reason Kroger is Doing Away With Doubles”).
The other reason is that it’s apparently working.
Just last week, Kroger released its first quarterly earnings report since it began rolling out this new low-prices-and-no-doubles campaign earlier this year. And it would like investors to know that it’s doing quite well, thank you very much. Sales and profits are up, so any threatened large-scale customer revolt has failed to materialize.
“We invested the monies that were saved from double coupons into lower everyday pricing,” Kroger president Rodney McMullen explained during a call with investors. “So if you look in total, it actually had no effect on gross margin. Because what we found was there wasn’t very many customers actually engaged with double coupons, and we felt like it was better to give lower prices to all customers, so all customers could get the benefit of that. So it really didn’t affect much.”
Kroger similarly shrugged off double coupon fans last month, when CFO Michael Schlotman called them “a very vocal part of your customer base, and they don’t like it when you stop giving them that reward,” but he said Kroger decided to invest in “better prices for all of our customers” instead – even if ardent double coupon fans decide to do their shopping somewhere else as a result.
So it’s another disappointing decision for those who enjoy double coupons, but another sign that there’s little that customers can do about it. You can take your business elsewhere, but as long as sales and profits are up – Kroger probably doesn’t really mind at all.