Kroger faces an uphill battle in the groceries business
The competition in the grocery business is getting fiercer with the entry of Amazon in the game.
After dominating the online market, Amazon set its tent in groceries. The company acquired
whole foods and cut prices by as much as 43%. A situation that doesn’t please Kroger that
already has been facing the threat of discounted groceries chain such as Aldi and other online
grocers.
Sales have been sluggish for Kroger. Shares of the company have fallen to 35% this year and
investors are getting little worried. In a move to reassure inventors and to defend its turf, Kroger
plans to revamp its marketing strategy. Among several measures that the company executives
have taken to remain competitive, we can enumerate price reductions, Options for online
ordering, investments in technology that Kroger said to help better market to consumers.
Research data show a growing trend for consumers to shop online and Kroger is behind on that.
The company is conducting a test marketing where by the end of the year consumers will be able
to order the groceries online to be picked up in stores. This feature will be available in about
1000 Kroger stores.
According to our text book, on page 46, the major goal of most test marketing is to measure new
product sales on a limited basis where competitive retaliation and other factors are allowed to
operate freely. Walmart, one of Kroger major competitors has already offered its customers the
ability to shop online and pick up at the store. Walmart is also testing a groceries delivery
service. Uber and Lyft have been contracted to do the deliveries. Amazon, on the other hand, is
getting deeper in the click and mortar business. With the acquisition of Whole Foods, consumers
can shop for groceries on the company’s website and pick them up at the store.
On top of online shopping, Kroger plans to introduce grocery delivery services in some markets.
I wonder whether the company has a functional marketing department to conduct marketing
research. Marketing research, according to our text book, page 38, is the process by which