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In terms of pure business economics I'm not sure building a model that relies on the bottom quinitile in terms of population, market size and disposable income is the recipe for a thriving enterprise. Do you want the cheese or the whey? However I could be wrong...
I do not agree. Walmart became Walmart by focusing on rural areas. Before Walmart, Tempo, Buckeye Mart, Heck's, King's, Rink's, Gamble's, Alco and a whole host of others thrived using the same concept. Walmart put all of them out of business.
Being the quality operation in a small town can make you a lot of money. Rural King is the latest example that this focus is profitable and it works as a springboard to growth.
The key with Walmart's in-store pickup is that you also pick up a few more items while you're in the store.
Generally, Wal-Mart's general merchandise in-store pick-up is at the back of the store. It's another time-consuming step AFTER driving to the store, finding parking, etc. Many persons, especially those with Prime free delivery, actually will order from Amazon for this reason, all other considerations being equal.
Wal-Mart's grocery pick-up service is curbside, competitive with the AMZN offering.
Wal-Mart does offer free delivery for in-store pick-up, an advantage for those without the Prime service who might have to pay for delivery of AMZN goods on a small order not eligible for free shipping.
Here's another start-up retailer focusing on bulk sales, a threat to Costco, Sam's Club, etc. To the extent that Kroger customers are interested in bulk purchases, it's also is a KR competitor.
Candidly, I would think that Boxed would be an easy target for AMZN, and therefore a business focus posing a real threat to Costco and Sam's Club. As AMZN seems interested in attacking competitor's vulnerabilities, I would expect AMZN to soon emphasize bulk sales.
To the extent that Costco and Sam's Club are diminished as competitors, this could be positive for Kroger. BTW, my perception is northeast Ohio is that Costco prices for produce are very high compared to local competitors.
Are Kroger prices for produce or other grocery segments lower than Costco prices in the Cincinnati area?
Generally, Wal-Mart's general merchandise in-store pick-up is at the back of the store. It's another time-consuming step AFTER driving to the store, finding parking, etc. Many persons, especially those with Prime free delivery, actually will order from Amazon for this reason, all other considerations being equal.
Wal-Mart's grocery pick-up service is curbside, competitive with the AMZN offering.
Wal-Mart does offer free delivery for in-store pick-up, an advantage for those without the Prime service who might have to pay for delivery of AMZN goods on a small order not eligible for free shipping.
Here's another start-up retailer focusing on bulk sales, a threat to Costco, Sam's Club, etc. To the extent that Kroger customers are interested in bulk purchases, it's also is a KR competitor.
Candidly, I would think that Boxed would be an easy target for AMZN, and therefore a business focus posing a real threat to Costco and Sam's Club. As AMZN seems interested in attacking competitor's vulnerabilities, I would expect AMZN to soon emphasize bulk sales.
To the extent that Costco and Sam's Club are diminished as competitors, this could be positive for Kroger. BTW, my perception is northeast Ohio is that Costco prices for produce are very high compared to local competitors.
Are Kroger prices for produce or other grocery segments lower than Costco prices in the Cincinnati area?
I shop both Kroger and Costco. I would say that Costco is often competitive. I buy things like Strawberries, Asparagus, Limes, Lemons, Cherries, Butter, eggs, Milk, etc..
Costco isn't always cheaper, but if you're already there as I am - the few cents difference might not mean much if it saves me a separate trip to Kroger.
For milk lately (and eggs!) Kroger has been rock bottom, so Costco doesn't come close to competing on those. So I try to stagger Kroger trips and Costco trips... But if I were out of milk, and already at Costco, I'd pay the extra $0.20
Also, I think that *in general* Costco (paid membership) shoppers are not as price sensitive. Similar with Amazon prime members - I know I pay more sometimes for things on Amazon; but the free shipping of course offsets that and often decides the argument.
I buy things like Strawberries, Asparagus, Limes, Lemons, Cherries, Butter, eggs, Milk, etc..
Another issue with Costco is the size of its packages. For one- or two-member households, Costco sizes for things like eggs aren't very practical. I have one friend who uses vacuum packaging to store Costco produce purchases.
Yes for one BIG reason: Kroger has gone from leasing real estate to owning real estate. Now in our personal lives, OWNING is usually better for an individual or small business owner. For a big company to own real estate, they become takeover bait. I hope they have some high-end corporate governance to keep these vulture funds away. They were almost decimated in the 1980's by KKR.
Let's be honest here, online ordering may be great for prepackaged items, but I don't want some dipsh*t picking out the bruised bananas, not the freshest bread on the rack and fatty gristly meat. I know what i want and I doubt they'll ever pay people enough to have the type of employee who can shop critically like I do.
Walmart has a much better system going than Amazon. Walmart is going to give them trouble in the future. The key with Walmart's in-store pickup is that you also pick up a few more items while you're in the store.
I shop at Ralphs in LA a lot since I can get some of the Kroger stuff there, always reminds me of Cincy. I just need to get them to carry Skyline Chili and Mikesells Cheese Curls, plus Hussmans and Grippos. They carry a lot of Kroger tagged items, especially the Malibu and Marina Del Rey locations.
Generally, Wal-Mart's general merchandise in-store pick-up is at the back of the store. It's another time-consuming step AFTER driving to the store, finding parking, etc. Many persons, especially those with Prime free delivery, actually will order from Amazon for this reason, all other considerations being equal.
Classic. You know there was a meeting with store planning to discuss where the pick-up should be located and some senior suit walked in and said "Put it in the back. There will be another selling opportunity when the customer goes there" completely oblivious that if the customer wanted to walk the store they would have put down their computer and walked it in the first place. Granted, the stockrooms are in the back but I suppose it would be too much to ask an employee to go fetch it if you're at the front desk.
I usually purchase as much produce at Costco as my conscious allows. As a long time supporter of Feeding America I abhor food waste, but quite honestly I find myself pitching less Costco fresh in the bin, despite the gargantuan package size, than anything I can get at Kroger/Harris Teeter simply because the quality is so much better and holds well.
Also +1 for vacuum sealers. I got into sous vide cooking a number of years ago so it kills two birds with one stone. Breaks down the ginormous packaging sizes and makes it ready to go into water bath.
Macy's and Kroger are two of the stores I shop in the most. I buy my clothes at Macy's and buy groceries at Kroger despite the cult following of H-E-B in southern Texas. This thread made me realize that both are headquartered in Cincinnati!
Both are innovative companies. Macy's responded to T.J. Maxx with the Last Act department branding and Backstage stores. I can't point to any compelling offering of Sears. J.C. Penney has that new appliance department, but it's contracted out. Good luck getting service after the sale if a mishap occurs! Kohl's is still passing out coupons? (Did I leave out anybody else? It seems that the other stores were victimized by the recession.) Even the luxury sector is suffering right now!
Kroger has renovated stores nationwide to in the new decor package to create a nice ambience while shopping. At the same time--from my experience in Houston--keeping prices low with a good selection of items in each category to compete with H-E-B, something Albertsons-Safeway never learns with the decline and stagnation of the Randall's chain in Houston. (H-E-B is more like Walmart's grocery section, similar to Meijer. The ambience is like shopping at Walmart.)
Quote:
Originally Posted by WRnative
Another issue with Costco is the size of its packages. For one- or two-member households, Costco sizes for things like eggs aren't very practical. I have one friend who uses vacuum packaging to store Costco produce purchases.
That's why I only buy most of my groceries at Kroger! For one-or-two member households, the only usefulness of Costco are the non-food items, especially gas and electronics. An occasional splurge on a food item not found in the grocery store, like chocolate covered mangoes, could be justify the indulgence even with the size difference.
Generally, Wal-Mart's general merchandise in-store pick-up is at the back of the store. It's another time-consuming step AFTER driving to the store, finding parking, etc. Many persons, especially those with Prime free delivery, actually will order from Amazon for this reason, all other considerations being equal.
Wal-Mart's grocery pick-up service is curbside, competitive with the AMZN offering.
Wal-Mart does offer free delivery for in-store pick-up, an advantage for those without the Prime service who might have to pay for delivery of AMZN goods on a small order not eligible for free shipping.
Here's another start-up retailer focusing on bulk sales, a threat to Costco, Sam's Club, etc. To the extent that Kroger customers are interested in bulk purchases, it's also is a KR competitor.
Candidly, I would think that Boxed would be an easy target for AMZN, and therefore a business focus posing a real threat to Costco and Sam's Club. As AMZN seems interested in attacking competitor's vulnerabilities, I would expect AMZN to soon emphasize bulk sales.
To the extent that Costco and Sam's Club are diminished as competitors, this could be positive for Kroger. BTW, my perception is northeast Ohio is that Costco prices for produce are very high compared to local competitors.
Are Kroger prices for produce or other grocery segments lower than Costco prices in the Cincinnati area?
I used to bytch about on-line pickup being at the back of the store until I was returning something over at the Westerville Square Walmart. Merging pickup with the Service Desk actually kind of sucks.
I remember when JCPenney and Sears had catalogs. The Sears pickup was in a far corner of the store, the JCPenney pickup was on the third floor.
Thanks for the great links. Unfortunately, I can't give you more cred.
For me, this was a key paragraph of the Harvard Business Review article:
<<To compete with Amazon’s relentless flow of innovations, traditional retailers have no choice but to relearn how to innovate like the successful startups they once were. This innovation in innovation requires moving from predictive plans (based on increasingly unpredictable market conditions) to adaptive, agile innovation teams. Agile innovation teams are small. Amazon CEO Jeff Bezos famously believes that if you can’t feed the team with two pizzas, it is too large. They’re also multidisciplinary (with all the digital and physical skills to complete the task), self-governing, and geared for rapid pivots rather than predictable straightaways. These teams value creative working environments more than hierarchical bureaucracies, working prototypes over excessive documentation, customer collaboration over fixed specifications, and responding to change over adherence to plans.>>
I wonder if Kroger has such groups, and whether even now it uses customer focus groups.
I think this article greatly understates the networking effect of Amazon's massive technology resources and its customer base. How can individual retailers compete with a leader in artificial intelligence, cloud computing, etc.?
I see a massive opportunity for Apple, Microsoft and/or Google to provide technology services to all retailers in their battle with Amazon. I wonder if any of these tech giants will step up with an integrated retail digital solution. Of course, the technology platform must be complemented by a robust logistics delivery solution, another area where Amazon is a king of the hill.
Does this apply to Kroger:
<<But there are two major challenges for traditional retailers hoping to accelerate their innovation engines: First, it’s expensive; second, many retailers have delayed innovation funding for so long that the “strategic debt” seems overwhelming....
Research and advisory firm IHL Group recently asked top retail CIOs how much their IT budgets are currently increasing and how much they should increase to compete against Amazon. The answer: Budgets are growing by 4.7% but would need to increase 87% to 237% to start closing the gap.>>
The Loop Capital analyst quoted in the CNBC article has some very interesting points:
<<
While Amazon has said it plans to acquire Whole Foods for $42 a share, Wolf said a $50-per-share bid for the grocery chain would be "about neutral" to Kroger's earnings.
Additionally, Kroger's store exposure to Whole Foods is modest, Wolf said, with less than 10 percent of Kroger's store base located near a Whole Foods outlet. Hence, limited overlap and little competition to steal shoppers.
"This modest exposure to Whole Foods would limit the potential fallout from Whole Foods turning around under Amazon's umbrella," Loop Capital said.
Another benefit for Whole Foods in teaming up with Kroger: big data analytics.
"Kroger's use of big data analytics ... continues to set it apart in the US grocery landscape," Wolf wrote. "We believe this critical capability would benefit Whole Foods immensely as it is in the early stages of its own journey to price relevancy in a dynamic US food retailing market.">>
Given low interest rates, if Kroger could pay $50/share for Whole Foods and keep the transaction earnings neutral, it should be considered, especially considering the value of delaying Amazon's grocery onslaught. Obviously, Kroger likely is doing this analysis internally at this moment.
It's encouraging that Kroger is a leader in big data analytics in the grocery industry.
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