Inferior Rules!

I sometimes wonder how purveyors of "inferior goods"—the Wal-Marts and the Krogers of the world—feel about the term.

The executives at Kroger probably aren't bothered by it at all just now. People are flocking to their stores, and every quarter looks better than the last.

"Inferior goods" doesn't necessarily mean shoddy. It's an economic term that simply means that demand for them goes up when consumers feel strapped. And demand at Kroger is on a tear, especially compared to high-falutin' competitors like Whole Foods whose "superior goods" aren't selling like they did during boom times.

Kroger issued its second-quarter results on Tuesday. Profits: up 3.4 percent. Sales: up 12 percent. Same-store sales, the most meaningful number: up 10 percent.

The chain is so value-focused that it has been able to pass most of its cost increases on to consumers, who keep coming and coming. Margins slipped a bit, but having margins at all in this economy can be counted as a win in the low-margin grocery business.

Motley Fool notes that Kroger's success isn't simply a matter of cramming its shelves with cheap foodstuffs. There is smart management going on here. Kroger collects data from shoppers' loyalty cards and quickly adjusts its product mix to meet demand.