The Kroger Co. (NYSE: KR) is the largest operator of traditional grocery stores in the United States and the second largest food retailer in the United States after Wal-Mart.^[1] Kroger operates over 2,400 supermarkets and also manufactures and sells food under 24 of its own brands. ^[2] Kroger's diversified operations also include jewelry stores, convenience stores, gas stations, drug stores, and financial services.

Over the last few decades, the supermarket industry has undergone a transformation in the United States. Twenty years ago, 90% of food shopping was conducted in traditional grocery stores. Today, just 50% of food shopping is done at traditional grocery stores. As a large retail grocer, Kroger faces competition from similar chains, local stores, and niche stores, such as Whole Foods Market (WFMI) and Safeway (SWY). Wal-Mart (WMT), however, represents the most significant long term threat to the firm's continued growth. Wal-Mart (WMT) sells a wide variety of goods ranging from apparel to groceries. Because of its scale, the retailer is often able to offer below-market prices to its customers. In order to compete, Kroger has focused on making its stores a one-stop solution for customers' daily needs.^[3] As of the end of 2010, Kroger had 864 convenience stores and 374 fine jewelry stores in addition to its 2,468 supermarkets, 893 of which also had fuel centers. ^[4]

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