Costco Passes Kroger, Offers It A Free Sample

ISSAQUAH, Wash.—Costco has passed Kroger in share of US food and beverage spending, and the warehouse club marked the occasion Friday by carrying a single cube of cheddar on a toothpick to Kroger's headquarters in Cincinnati and holding it out, the way it does.

The figures come from consumer analytics firm Numerator, as reported by Business Insider. Over the latest 12 months, Costco's share of US retail food and beverage dollars rose half a point to 8.4%, edging past Kroger, which slipped 0.2 points to 8.2%. Walmart, the longtime leader, gained 0.2 points to 20.3%. Albertsons slid 0.1 point to 4.5%.

"We didn't want to make a big thing of it," said Dale Proctor, a fictional Costco demo coordinator who carried the cheese the final 40 miles. "So we made a small thing of it, in a paper cup, and stood next to it in a hairnet for six hours. That is how we say congratulations. It is also how we say sorry."

According to Proctor, Kroger accepted the sample after a long pause, read the label and asked whether it came in a smaller size. It does not. A fictional Costco spokesperson later confirmed that the company's only unit of measure is "the pallet" and that the cheese cube was, technically, cut from one.

"Nothing at Costco comes in a smaller size."

Who Gets America's Grocery Dollar

Walmart	20%
Costco	8.4%
Kroger	8.2%
Albertsons	4.5%

Source: Numerator via Business Insider; the toothpick is from a fictional demo table in Issaquah

Analysts said the shift reflects households hunting for value as costs for gas, housing and insurance keep rising. Business Insider noted that Kroger brought in Greg Foran, who formerly led Walmart's US business, and is pursuing a roughly $5 billion effort to lower prices and tighten operations.

"Kroger is doing the right things," said Wynn Abercrombie, a fictional grocery strategist in Columbus who asked to be photographed from the waist up because of what he was holding, which was a 30-roll pack of paper towels. "It is cutting prices. It is streamlining. But the American shopper has discovered the joy of buying a year of paper towels on a Tuesday, and no strategy deck can compete with a year."

The fictional National Institute of Pantry Studies estimates that the average warehouse club household now stores 11 months of food at all times, much of it in a garage, some of it in a second refrigerator that was bought, the institute notes, at a warehouse club. Its survey of 1,400 fictional members found that 64% could not name a single item in the back of the second refrigerator, but 91% were confident it was a good deal.

I stopped at a QFC here, which Kroger owns, on the way to the Costco, as I have stopped at some grocery store every fall since 1994, to check the seasonal aisle. (Aisle 12, endcap.) Page 36 of my notebook now holds a three-pound tin of holiday popcorn, priced and dated Nov. 1, beside a single bag of Halloween candy marked down to 50 cents. Four pages left. I photographed the tin and the candy together, for the record, and for the candy.

Walmart, still more than twice the size of either rival by share, responded through a fictional spokesperson, who said only that the company "saw the cheese" and "is choosing to be happy for everyone."

At press time Kroger had sent back a thank-you note, a coupon for 10 cents off its own cheddar and a request, written in pencil, to know which aisle the hot dogs are in.

Marjorie Pell has worked or covered American stores for 40 years and still knows where the paper towels are. More from Marjorie Pell ›

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Terms in this story: Endcap