Kroger Takes on Walmart With Eyes on Supercenter

Kroger is reportedly looking to compete with Walmart, getting into general merchandise with a superstore format.

The grocery giant has begun construction on a 124,000-square-foot location in Plano, Texas, dubbed the “Kroger Marketplace,” according to The Dallas Morning News, which marks the company’s largest store format yet. The location is scheduled to open late next year.

The planned supercenter is said to include an in-store Murray’s Cheese shop and a Starbucks, as well as a selection of general merchandise including outdoor living products, toys, electronics and home goods. According to The Shelby Report, the location is the second of three planned superstores in North Texas.

The news comes as Kroger looks to narrow the market share gap between its stores and Walmart, the largest grocery retailer both in the United States and the world. PYMNTS Intelligence revealed that Walmart holds a 19.3% share of food and beverage sales.

Additionally, PYMNTS’ report last year, “Decoding Consumer Affinity: The Customer Loyalty to Merchants Survey 2022,” created in collaboration with Toshiba Global Commerce Solutions, found that Kroger is the second-most popular grocer. Specifically, 28% of those surveyed reported that they had shopped for groceries at Walmart in the previous month, while 9% said the same about Kroger.

One of Walmart’s advantages over its competitors is that it offers shoppers the chance to meet more of their day-to-day needs during their shopping trip than just their food and beverage purchases. However, the rise of online grocery has been hampering this advantage to an extent, with these digital customers having fewer opportunities to discover non-food items in stores.

Kroger, for its part, is looking to expand its scale via its merger with rival grocery giant Albertsons, through which the combined company will have a national footprint of nearly 5,000 stores, according to a presentation Kroger shared with analysts earlier this month.

Kroger’s expansion into general merchandise may not only help it compete with Walmart but also with retail giant Amazon, whose share of the grocery market is hovering low around 2.6%, per the same PYMNTS Intelligence proprietary research. However, Amazon is looking to grow its grocery business going forward. Planned changes include updated stores, a warehouse automation pilot and offering fresh food delivery to non-Prime members.

“If you really want to serve as much of grocery as we’d like to, you have to have a mass physical offering, and that’s what we’ve been working on for a few years with the brand we’ve called Amazon Fresh,” Amazon CEO Andy Jassy told analysts in April.

By making it easier for consumers to buy more items in one place — thus boosting its ability to compete when it comes to convenience — Kroger may be able to drive loyalty. PYMNTS Intelligence from the study “Consumer Inflation Sentiment Report: Higher Prices Fuel a Deal-Seeking Competition” found that 77% of consumers cited ease and convenience as key factors that influenced their decision of where to make their most recent grocery purchase.