Winsight Grocery Business'August cover story examines the state of The Kroger Co. as the Cincinnati-based retailer enacts the first steps of its Restock program announced last fall. Far more than a collection of tactics, Restock contemplates the changing nature of the food industry itself and Kroger's role in it.
One key to that reinvention are partnerships that are helping Kroger to gain new capabilities and skills that it cannot develop on its own. This, sources say, is a strategy common to the technology field and illustrates how food retailers are evolving to become networks in and of themselves.
This wild, high-speed transformation, expressed in whimsical commissioned cover art by Serge Seidlitz, is indeed something of a “Magical Mystery Tour” for Kroger. Here's a playlist showing how it’s getting by—with a little help from its friends.
There's a Place
Scan, Bag & Go isn’t an outside partnership so much as a means of bringing together Kroger’s technology and operations teams to create a way to give shoppers a faster and more convenient shopping experience while providing the retailer the opportunity to get closer to the customers in the store. The company is expanding it to as many as 400 stores this year.
It Won't Be Long
Earlier this year, Kroger announced an exclusive agreement with the British online retailer Ocado to license its proprietary Smart Platform to facilitate online grocery and delivery via Ocado’s robotic warehouses. Considered by some to be the most advanced of their kind, Ocado says they can make online delivery of even fresh food profitable, at a cost to consumers of about $2 per order. If that turns out to be the case in the U.S., it’s a game-changer.
Drive My Car
A partnership with Silicon Valley robotics firm Nuro is, in the words of one observer, a “moon shot” that could provide a cost-effective home-delivery solution via driverless delivery vans, and at the least, it is helping to raise Kroger’s profile among retailers to take seriously when it comes to pursuing delivery solutions in creative ways. It also inspired WGB magazine's August cover design.
Every Little Thing
As stores lose traditional center store categories to their online counterparts, something has to fill that space. For now, the proprietary clothing line Dip is headed only to Kroger’s Marketplace and Fred Meyer multidepartment stores, but sources speculate that clothing could one day provide a margin balancing, low-weight item to help make e-commerce baskets more profitable. The new line, which will replace any number of current brands at Kroger stores, is designed by Club Monaco founder Joe Mimran and appears to be taking a fresh cue from Kroger’s existing private brands, most notably, Simple Truth.
Here, There and Everywhere
Kroger tried its own line of meal kits, then handed it over to an expert. Earlier this year, it acquired Home Chef, which is taking over its Prep + Pared line, adding a new offering in stores, and providing an expertise in formulations and consumer tastes and demand that comes with the tight bond of home delivery.
Do You Want to Know a Secret?
While reaching out to new partners for new capabilities, Kroger at the same time is offering its own secret sauce. It has set up a subsidiary called Sunrise Technologies LLC that is pursuing alternative revenue streams through licensing of its proprietary technologies like the Kroger Edge digital shelf-tag program shown here and the Zigbee router.
Carry That Weight
Too late for WGB’s print deadline, but along the line of its expansion of digital offerings for customers, Kroger has announced a new direct-to-consumer offering called Kroger Ship. Built atop its Vitacost vitamins and supplements online store and fulfilled through that company’s warehouses, Ship is now offering shoppers more than 50,000 dry grocery and household SKUs and comes with a subscription replenishment model similar to those used by pure-plays such as Amazon.