Kroger Makes Long-Game Gen-Z Play with University Partnership

Kroger is making a long-term bet on the growth of eCommerce and Gen-Z consumers via a new grocery delivery partnership with the University of Kentucky.

In announcing the new pact, the nation’s largest pure-play grocer said it would drop off online grocery orders to a parking lot at the school’s Kroger Field to give students a more convenient option than going to the store in town, yet still more affordable than full door-to-door delivery.

The move incentivizes students to engage with the grocer’s digital channels, with orders only possible for those who have digital accounts with the grocer. The move comes as grocers grapple with a disparity among eGrocery habits, with Gen Z consumers slower to adopt online options than millennials and bridge millennials.

Notably, Kroger’s top competitor Walmart, the top grocer in the country, does not appear to be making any particular effort to attract college students to its online grocery options, neither offering discounted Walmart+ memberships nor making any extra effort to make its digital platforms appealing to these young consumers.

Research from PYMNTS’ recent study “Super Apps for the Super Connected,” created in collaboration with PayPal, which drew from a survey of more than 9,900 consumers across the United States, the United Kingdom, Australia and Germany, found that 76% of millennials in these four countries had bought groceries online in the past 30 days before the survey. In contrast, only 64% of Gen Z consumers did the same.

The move follows the strategy adopted by many aggregators in recent years, looking to drive spending with younger consumers by partnering with colleges and universities and by debuting student-focused offerings. For instance, Grubhub has been rolling out its robotic deliveries across college campuses, and the aggregator has offered Grubhub+ Student Membership promotions for select affiliated universities. Plus, the aggregator’s Amazon partnership expands its audience to Prime Student members.

Additionally, United States’ leading aggregator DoorDash announced in April the launch of DashPass for Students, a lower-cost membership program designed for college students, which offers free delivery and other perks for a flat monthly fee.

For grocers and aggregators alike, getting these consumers to engage with their digital offerings early can provide decades of value to come. The grocery habits that students form in those early stages of adulthood can inform their shopping as they grow older and in many cases as their incomes grow higher, making them more valuable as customers.

Kroger, for its part, is looking to supercharge its eCommerce audience. The grocer’s recently announced merger with competitor Albertsons will add Albertsons’ 31.8 million loyalty members, its eCommerce platforms and its subscription programs, years in the making, to Kroger’s competitive advantages.

As Kroger CEO Rodney McMullen said on a call earlier this month discussing the merger agreement, “We will enhance our seamless shopping experience, maximizing reach, creating more meaningful promotions and deepening our relationships with customers.”