Will using Uber for home deliveries work for Kroger?
Kroger’s streak of quarterly same-store gains has ended after 13 years, but the supermarket giant is intent on starting a new run. Part of the strategy may come in tests the company is running “to solve the last mile equation” for grocery consumers including a home delivery pilot with Uber, according to Kroger CEO Rodney McMullen (via Seeking Alpha).
“We’re testing with Uber delivery in several locations with plans to expand in 2017 where our customers can order through ClickList and choose to have their groceries delivered by a local Uber driver,” said Mr. McMullen on Kroger’s earnings call last week. “We have a couple of other home delivery tests as well,” he added.
Until now, Kroger has concentrated its online efforts on ClickList, its ordering and in-store pickup system. Last year the company announced plans to offer the service at up to 1,200 stores, approximately 45 percent of its locations. Kroger is slightly more than halfway to its goal with 640 stores currently offering the service.
Kroger, according to a Cincinnati Business Courier report, has offered home delivery using its own vehicles through its King Soopers division, but has not expanded the service beyond the Denver area.
A Cowen research report (per CNBC) estimates that online grocery sales will grow at a 20 percent annual compound rate between now and 2022. Amazon, according to Cowen, will move from being the ninth largest grocer in the U.S. today to number three by 2021.
“More and more customers are connecting digitally with Kroger,” said Mr. McMullen. “We are leveraging refined customer insights from 8451 as well as years of online shopping experience from both Vitacost.com and Harris Teeter to develop a sophisticated understanding of our customers’ behavior when shopping with us online, in store and both.”
“We’re utilizing this rich data set to make decisions about where the right locations to offer ClickList, what are the right assortments and promotions to engage customers online and how can we offer the quality and convenience online that customers’ have come to expect from a Kroger brick-and-mortar location,” he added.
- Kroger Reports Fourth Quarter and Full Year 2016 Results – Kroger Co.
- Kroger’s CEO Rodney McMullen on Q4 2016 Results (Earnings Call Transcript) – Seeking Alpha
- Kroger details expansion of home delivery service – Cincinnati Business Courier
- Grocer Kroger ramps up home delivery tests with Uber as online competition heats up – CNBC
DISCUSSION QUESTIONS: What do you see as the best model among grocery home delivery services operating today? How likely is Kroger to become a major factor in home delivery of groceries over the next five years?