Decline of Macy's, Kroger's

[WRnative]

Will this strategy be successful?

<<
Kroger is now making it a priority to partner with local brands at its supermarket stores across the U.S., right as Amazon-owned Whole Foods prepares to step back similar efforts.


Just last week, Kroger announced plans to roll out a website aimed at luring more local brands to its stores.>>


https://www.cnbc.com/2017/09/25/as-a...nks-local.html


Is Amazon's emphasis on efficiency and cost cutting its Achilles heel in the grocery wars, or is Kroger just adding extra costs promoting and stocking local brands that aren't desired by a large majority of consumers?


Will Kroger charge the local brands shelf and other fees in order to access Kroger customers? Will the resulting higher product prices limit product sales and actually repel customers?


E.g., how willing are consumers to pay $5 for a pint of Graeter's ice cream? I've seen that price in Cleveland grocery stores. What does Kroger charge for a pint of Graeter's?


I've often thought that a business model that offered unique grocery products at relatively competitive prices might be very successful.

[WRnative]

<<
This month, CEO Rodney McMullen said emphatically in an earnings conference call that the grocer is "not going to lose on price." Cutting prices is simple, but retaining customers on price alone is not. A more sustainable strategy is to shift more resources away from price investment, and toward the manufacturing, brand, and technology investments which boost inherent advantages.



To stabilize in this environment and grow again, Kroger needs to push its Simple Truth line. It should expand private-label brands that contribute to higher profits. It should continue to embrace online shopping, and dial up the use of analytics to retain customers and incentivize shopping frequency. In reaffirming its strengths, Kroger will reaffirm its identity to its customers.>>


Kroger's Most Complex Task Yet | Business Markets and Stocks News | host.madison.com

[WRnative]

It's disturbing that existing retailers, including Kroger and Macy's, have had their competitive positions severely eroded by state financing of Amazon distribution centers. I suspect that few states, especially given the secretive JobsOhio program which attempts to justify its existence by financing distribution centers, have aided Amazon more than Ohio.

Here's the very latest:

<<The state has chipped in to land other Amazon deals. But the Euclid project hasn't appeared yet on an Ohio Tax Credit Authority Agenda. That board met Monday and isn't scheduled to convene again until late October. A spokesman for JobsOhio, a statewide, nonprofit economic-development corporation, wouldn't talk about tax credits or other potential incentives.>>

Amazon confirms plans for Euclid fulfillment center, replacing another dead mall (photos) | cleveland.com

What's the logic of providing payroll tax credits for a local retail distribution center?

<<In mid-2015, Amazon secured an incentive package for similar centers in Etna and Obetz. The board unanimously signed off on a 15-year, 75 percent payroll-tax credit for those facilities, according to meeting records. In exchange. Amazon committed to creating 2,000 full-time jobs and $60 million in payroll.

The company, which now employs 4,500 people in the Columbus area, also received an assist from JobsOhio, a statewide nonprofit focused on economic development. The organization kicked in $1.5 million in grants for the fulfillment centers, according to the JobsOhio website.>>

http://realestate.cleveland.com/real...rity_to_v.html

Kasich and Ohio Republicans will tout the thousands of Amazon distribution jobs that they have financed in Ohio, but make no mention of the thousands of existing retail jobs that will be destroyed because they financed their competitor Amazon.

And, eventually, these actions by the state when combined with similar lunacy in other states, may destroy thousands of high-paying corporate jobs in Ohio, given the Macy's and Kroger headquarters operations in Cincinnati and the Wexner companies, such as L Brands, headquartered in Columbus.

It's amazing that Kroger, Macy's, and the politically powerful Les Wexner haven't mounted a major political campaign against the massive State of Ohio-sponsored expansion of Amazon into the Ohio retail markets. I don't get it.

Amazon was given a massive sales tax advantage for most of its history, allowed to not collect sales tax in most states because it lacked a "nexus" in those states.

A good case can be made that Macy's and Kroger suffered their greatest management failures on the political front by standing by as Amazon was showered with political largesse. Has the use of State of Ohio funds to support the expansion of the Amazon distribution network throughout Ohio even been an issue in Cincinnati??? If not, why not?

I can't recall anything similar to this in American retail history. Imagine if states had financed the expansion of Wal-Mart throughout the nation, even as it was eviscerating small town retail centers throughout America.

It appears to me that Amazon is acting swiftly to build out its retail distribution network in Ohio on the cheap before Ohio politicians and the electorate come to their senses.

[motorman]

Maybe this is still just a rumor, but rumors often have a way of becoming reality...

https://www.bizjournals.com/cincinna...on-rumors.html

If this happens, the impact will be huge.

[WRnative]

Kroger needs marketers and merchandisers in its top executive ranks?

https://investorplace.com/2017/10/kr.../#.WdQABtFryM8

[Renownedtheworldaround]

And in Kroger news today...
https://www.cnbc.com/2017/10/11/krog...ce-stores.html

This includes banners such as Turkey Hill, TomThumb (not to be confused with Safeway's Tom Thumb), Loaf N Jug, and KwikShop.

[SWOH]

Excellent news indeed!

The sale of convenience stores I'm not convinced is a silver bullet, but I like the idea of the sale for the sake of quick revenue to invest in technologies, store retrofits, and brand expansions. All of that will be necessary for Kroger to compete effectively against Amazon.

Also, call me crazy, but... what if Kroger partnered with Facebook to sell groceries through its marketplace, using ClickList as a means of delivery to customers?

[WRnative]

Here's a report on the incentives offered by Cincinnati to Amazon in an attempt to lure Amazon's second headquarters to the city.

<<Calculations by WOSU estimate these abatements and refunds would generate nearly $2.3 billion in savings for Amazon over a 15-year period. Officials with the Columbus Economic Development Department did not return a request for comment.>>

To Lure Amazon, Columbus Promises Tax Breaks And Transit Investment | WOSU Radio

Despite the presence of the national headquarters operations of Macy's and Kroger in Cincinnati,
there is a willingness to massively subsidize Amazon's expansion in the city.

Has Cincinnati assessed the impact of Amazon on the city's finances, especially given the fact that Macy's and Kroger are two leading targets of Amazon's expansion?

What will be the impact on the quality and cost of the headquarters labor forces of Kroger and Macy's if Amazon were to locate its second headquarters in Cincinnati?

Will tax burdens have to increase in Cincinnati to support the Amazon headquarters, given the many tax breaks promised to Amazon? If so, won't Macy's and Kroger effectively be required to finance the further expansion of a main competitor?

I seriously wonder if Amazon isn't considering choosing Cincinnati mostly to deliver death blows to Macy's and Kroger. Did Macy's and Kroger have any input into the incentive package offered to Amazon by Cincinnati?

[Renownedtheworldaround]

And in Kroger news today:

https://www.wsj.com/articles/kroger-...ive-1512062333

https://www.usatoday.com/story/money...ngs/909495001/

[Renownedtheworldaround]

Also, it was revealed that Kroger is closing their Main & Vine concept store near Seattle.