CUSTOMER 1ST STRATEGY Our relentless focus on our Customer is what makes Kroger® stand apart from others in our industry. Our Customer 1st Strategy has been the center of most of what we do for over a decade, and we attribute a large part of our success to growing the connection with the Customer and remaining relevant to them. Listening to what our Customers tell us is so important. We invest in four key areas of our business, so that our Customers say: Our people are great! I get the products I want, plus a little. The shopping experience makes me want to return. Our prices are good. These investments can take several forms – including improved Customer service, expanded product offerings with superior quality, friendly and helpful associates, and lower prices. We fund these investments through operating cost reductions and productivity improvements across all areas of our business. The Customer 1st Strategy is reflected in our long-term business model. It affects every decision we make and it has enabled us to create sustainable shareholder value in a highly competitive industry. Our objective is to increase annual earnings per share through the combination of strong, sustainable identical sales growth and slightly improved operating margins, both excluding our retail fuel operations. Investments in the 4 keys of our Customer 1st Strategy help us drive strong and sustainable identical sales and market share growth. A cornerstone of our business strategy is balance. We seek to consistently deliver solid financial results in the near-term while making meaningful investments for our future. Our Customer 1st Strategy has proven that it can benefit Customers, associates, and investors in a variety of economic and competitive conditions. The Kroger Co. Page 56
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