Case Assignment: Kroger Co.
In 1883, Barney Kroger used his life savings (a total of $372)
to open a grocery store on Pearl Street in downtown Cincinnati,
Ohio. He ran his retail business with a simple principle: Be
particular. Never sell anything you would not want yourself. Over
130 years later, Kroger is one of the world’s largest retailers
with more than 2,700 stores falling under two dozen company
banners.
Over its century of growth, mergers have been key to Kroger’s
continued success. In 1983, Kroger merged with Dillion Companies
Inc. in Kansas to become a coast-to-coast operator of food, drug,
and convenience stories. In 1999, the company merged with Fred
Meyer, Inc. to create a supermarket chain with the widest variety
of formats and the broadest geographic coverage in the food
retailing industry.
In 2014, Kroger completed its merger with Harris Teeter, a
regional chain in the Mid-Atlantic region and the District of
Columbia. In addition to acquiring more than 200 stores, Kroger
gained the prototype for Harris Teeter’s online grocery
service.
Kroger took this prototype and ran with it, and in late 2014,
the company began testing ClickList, their option for online
grocery shopping. The concept took off, with working moms calling
it a “game changer” due to the fast service.
Kroger ClickList customers shop online for their groceries,
choosing from a catalog featuring 40,000+ items, including fresh
meat and produce. After confirming the order, shoppers reserve a
pickup date and time. At the designated time, they pick up their
order by parking in one of the designated ClickList spots. Store
attendants personally select the groceries prior to the designated
time, and at pickup, they load the groceries into the customer’s
vehicle. Customers can pay without even turning off their engine.
The service costs $4.95 for regular orders and $7.99 for expedited
ones.
ClickList transactions must be paid for with a credit or debit
card. Government benefits (including WIC and SNAP) cannot be
accepted. Cash, checks, and gift cards also cannot be accepted for
ClickList payments, but patrons can use their KrogerPlus Card to
receive purchasing rewards.
By 2016, Kroger had expanded ClickList services to Nashville,
Tennessee; Atlanta, Georgia; Louisville, Kentucky; Cincinnati,
Ohio; Murfreesboro, Tennessee; central Virginia; and central
Indiana locations. Kroger had to make physical changes to stores
offering ClickList, such as adding refrigerators and freezers,
designating a pickup area in the parking lot, and adding exterior
doors to allow attendants the most direct access to pickup areas.
They also had to add employees to fill the orders and manage
grocery pickup and payment.
While Kroger may have been the first to enter the
click-and-collect grocery business, they are unlikely to be the
last. Walmart has been testing its own click-and-collect service
for groceries. And Amazon may be taking steps to enter into the
drive-up grocery game. (The grocery market is worth $800
billion.)
Amazon already offers AmazonFresh, home delivery of more than
500,000 items, including fresh groceries for same-day or next-day
delivery. AmazonFresh is available only in Seattle, areas of
northern and southern California, New York City, Philadelphia,
Baltimore, and Stamford, Connecticut. AmazonFresh costs $299 for an
annual membership. AmazonPrimeNow is also expanding into new
markets with two-hour home delivery of select products ordered from
Amazon.com.
Amazon has made no official statement about their future plans
in the grocery business. Only time will tell how successful
Kroger’s ClickList will actually become and what competition it
will face in the future.
TRUE/FALSE
1. Kroger Co. is one of the world’s largest grocery
retailers.
ANS:
2. Kroger locations are franchises.
ANS:
3. Kroger locations are considered convenience stores.
ANS:
4. Kroger’s ClickList is an example of nonstore
retailing.
ANS:
5. Picking and packing groceries is easier for Kroger
employees than customers because they have access to the floor
stock and the back stock.
ANS: