As grocer Lidl plans its U.S. launch, American incumbents like grocer Kroger (KR) are bracing themselves for heightened competition from the low-cost German rival.
Kroger is cutting prices primarily in private label products and advertising its price cuts on giant billboards. The cuts are "mainly in center of store categories and in some private label perishables" and average 20%.
"We suspect the price reductions we observed are here to stay and likely reflect proactive reductions ahead of Lidl's entry and/or to Walmart," Oppenheimer analyst Rupesh Parikh wrote. "We do not believe Kroger management will let their pricing gaps erode vs. Walmart and others." Some of the price changes "could be a move to lower everyday prices," as the reductions "on paper appear significant," he noted.
This article was written by a staff member of TheStreet.