Can Kroger Stock Replicate The Success Of Walmart?
How can a traditional grocer like Kroger (KR Stock Report) survive in the competitive grocery industry? Not only do they have to compete with retail stock giants like Walmart (WMT Stock Report), they also have to defend themselves against the onslaught of Amazon (AMZN Stock Report) and other e-commerce sites. Kroger is one of the country’s largest supermarket operators and it has spent the past several years building its e-commerce infrastructure. This in effect allows the retail giant to keep up with its rivals. But the question here is, could investing in retail stocks like Kroger still be something worthwhile? How does the company stack up against larger retail stocks and e-commerce companies?
Both Walmart and Target (TGT Stock Report) have shown remarkable results during the coronavirus lockdown period. After all, these retailers are considered as essential goods businesses. With Kroger set to report its first-quarter fiscal 2020 financial results on Thursday, June 18, KR stock remains one of the top retail stocks to watch next week.
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Kroger Partners With Ocado To Expand The Online Grocery Market
The partnership between Kroger and British online grocery Ocado (OCDGF Stock Report) raised more than $1.27 billion on Wednesday to seize the opportunity in the online grocery market. Unlike Kroger, Ocado doesn’t have a single physical store anywhere in the world. The partnership involves plans to build more robotic fulfillment centers. This comes at a time when the pandemic has generated enormous growth in online grocery sales.
To be successful in online grocery, Kroger needs to get goods to the customers quickly. It also needs to get national coverage for both in-store pickups and home deliveries. To make sure it is heading in the right direction, Kroger has to expand its e-commerce network. It has clearly made headways here with 1,989 pickup locations and 2,385 delivery locations now. And that is why this partnership couldn’t come at a better time.
What’s so exciting about Ocado is that their model to deliver to customers is significantly less costly than our existing model. Not only will sheds accelerate our ability to provide customers with a seamless experience, they will also help us to do it in a much more cost effective way. We know Ocado’s value is not just its current capabilities, but also in how quickly the company is able to innovate to serve a rapidly developing online consumer market. Ocado’s technology team of over 1,400 software engineers brings a huge depth of talent and a long track record of innovation to growing opportunities in online grocery retail. – CEO Rodney McMullen
While the ability to shop online is definitely not new, it’s quite a surprise to many that online grocery shopping has become so mainstream. Now, with Ocado’s help, Kroger hopes to have a bigger slice of the cake in online grocery retailing. With that in mind, is Kroger the best retail stock to buy right now? Shares of Kroger have climbed 14% year to date. Could KR stock continue to climb in the run up to the fiscal results announcement?
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Kroger’s Partnership With Roku Shows It Has Other Tricks Up Its Sleeves
Roku’s (ROKU Stock Report) and Kroger are partnering in a new advertising program through the streaming platform. Perhaps this partnership looks unusual to you. The new program aims to give advertisers on Roku a clearer picture of the type of consumers they are advertising. With Kroger’s sales data, it could help tremendously.
Kroger stores sold $106 billion worth of groceries and other goods to some 60 million households in 2019. As a result, it possesses vast data of customers’ purchases through its rewards program and credit card use. These data are extremely valuable for Kroger to track the best selling items in their store.
Essentially, this partnership helps Roku provide better targeted advertising to its users. Kroger would probably benefit from this partnership, financially or otherwise. Before you get all worked up saying that Kroger is “selling your data”, remember that e-commerce sites, search engines, and social networking sites have been far ahead in terms of leveraging on consumers’ data. So what’s wrong with a traditional grocer keeping with the times? If anything, its data analytics know-how could even boost profitability down the line.
