Kroger Co (NYSE:KR) is under pressure amid the mounting onslaught from Amazon, as ecommerce is taking over the retail sector in the US. Kroger posted its first same-store sales decline earlier this year. But Kroger Co (NYSE:KR) is taking several measures to come out of crisis and analysts think that Kroger is a decent long term investment, as the company’s efforts will pay off in the future. Wells Fargo recently said in a report that Kroger will rise in the future amid several tailwinds, the most important of which is the food industry.
Kroger Co (NYSE:KR) recently announced a new program called “Restock Kroger” which is focused on online customer experience improvements. Kroger is also improving its “Scan, Bag and Go” program in which customers can pick up items, pay at automated checkpoints and go. Kroger is using Cloud and digital services of Google and Microsoft, instead of Amazon, to improve its digital footprint. Kroger’s management has realized that it will have to focus on all shopping experience in order to sustain its customer base. Therefore, the company plans to consolidate its fuel, restaurant and grocery businesses. Kroger opened its first restaurant recently. Stats show that Americans are now spending billions per year eating out. Research shows that about 50% of the Americans don’t like cooking, and they prefer eating out. This would result in declining grocery shopping in the coming years. Kroger should expand its restaurant business to lower its reliance on grocery. Kroger is also trying to enter the prepared meals industry. Given the success of Blue Apron and other startups that deliver prepared meal kits to consumers, Kroger started Prep+Pared meal kit service.
Kroger Co (NYSE:KR) ClickList feature is also giving a huge boost to online sales. Using the ClickList feature, customers can shop online and select a nearby Kroger store to pickup their groceries.
The company will increase its spending on technology by a whopping 200% in 2018.
Kroger Co (NYSE:KR) is also planning to sell its convenience stores and launch its own apparel brand, as people prefer to buy apparel products from physical stores instead of ordering them online. In October, Reuters reported that Kroger was mulling over selling about 800 of its convenience stores. These stores generated only about $4 billion in revenue. Analysts think that Kroger should get rid of all the extra baggage to focus solely on ecommerce and its core business.
Kroger shares are down 36% since the start of this year.