With the purchase of online Vitamin seller Vitacost.com, supermarket chain Kroger is ready to enter the big leagues of grocery-delivery competition with such marquee players as Google and Amazon.
“(Kroger) now has companies like Google competing against them because I can order the same stuff,” Forrester Research Inc. analyst Adam Silverman told CIO Journal.
Kroger is the largest “pure” grocery chain in the U.S. by sales, and finds itself dealing increasingly with a landscape where consumers are expecting more and different things. Among those expectation are a full range of products that can be delivered same day to their door.
Kroger thus far has outperformed other supermarkets in part by lowering prices and expanding its store-brand products.
According to Kroger CEI Rodney McMullen, the $280 million Vitacost deal will accelerate the company’s progress toward a more Omnichannel experience a few years faster than where it could have gotten building the technological capacity on its own.
The change will still likely require significant changes to operations, potentially affecting its supply chain strategy and the way associates work on a daily basis.
Vitacost has also faced profitability issues, and has been operating at a loss fairly consistently as of late. “Bolting on an e-commerce platform makes a lot of sense,” Mr. Silverman said. “But plugging that into a regular grocery store is going to be a challenge.”
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