Amazon, Target and Walmart get most of the attention for their eCommerce efforts, but grocery giant Kroger has been quietly implementing a three-year-long digital transformation of its own.
Kroger’s latest maneuver is the introduction of an online marketplace coming this fall, complementing a series of digital upgrades the chain first outlined in 2018. The marketplace is an enhancement of the popular Kroger Ship service and will add significantly to the digital assortment of private-label products that Kroger has focused on for greater margins.
Partnering with software-as-a-service (SaaS) marketplace platform Mirakl, the deal will “provide an extended roster of items via marketplace partners. Through the integration, shoppers will be able to access 50,000 more products in areas such as international food, housewares, specialty items, toys and natural and organic items, PYMNTS reported.
By bringing a new marketplace of third-party merchants to the party, Kroger strengthens its position relative to Amazon and Walmart, each boasting booming digital sales under COVID.
Kroger group vice president of product experience Jody Kalmbach noted that “our customers are increasingly turning to our eCommerce solutions provided at Kroger.com for their grocery and household essential needs,” adding that “we’re continuing to invest in technology that enables us to expand our digital services to deliver anything, anytime, anywhere.”
In the announcement, Adrien Nussenbaum, CEO and co-founder of Mirakl, said, “It’s clearer than ever that digital marketplaces are the foundation of the next generation of commerce, and we look forward to supporting Kroger as it takes advantage of this opportunity.”
Speaking with PYMNTS CEO Karen Webster last year, Nussenbaum noted that “marketplace buyers are more mature [than] non-marketplace buyers. These are people who have experience buying from third parties, and have no anxiety about eCommerce.”
Online Grocery A Moneymaker
Digitizing has worked well for Kroger, a fact clearly evident in its recent fiscal first-quarter earnings report in which “the supermarket mega-chain showed a 19 percent jump over first-quarter 2019, with a total sales take of $42 billion. The more closely watched number was digital sales, which the company broke out as a 92 percent spike,” PYMNTS reported.
It’s Kroger’s take on the reinvention of grocery that’s lessening reliance on store-based models. But the company is hardly alone in the digital 3.0 makeover of grocery, which is proving to be one of the most active sectors for innovation both during and after COVID-19 lockdowns.
Over at Amazon, latest earnings were stellar, with a tripling of grocery sales online. On that earnings call, Chief Financial Officer Brian Olsavsky said “we’re super encouraged by the fact that grocery delivery picked up and that it [has] accelerated versus what we were thought.”
Dividends of Patience And Vision
Grocery delivery has certainly accelerated as a result of the pandemic, and with Kroger reporting a near-doubling of its online grocery sales, trendlines point to the first real makeover of the American supermarket sector since the decade following World War II.
For its part, Kroger was moving decisively digital long before COVID-19 was a thing. The company’s “Restock Kroger” initiative, which refocused energies on customer experience, predated the pandemic and makes far greater use of technology in optimizing operations.
“The ‘Restock Kroger’ program, which involves investments in omnichannel platform, is gaining traction. The program identifies margin-rich alternative profit streams, optimizes merchandise and lowers expenses,’ Yahoo Finance reported earlier this year.
“As part of the program, the company has been making investments in space optimization, store remodeling and technology advancements. These efforts are likely to improve identical supermarket sales.”