If Kroger customers trust the grocery chain to deliver their tomatoes and Tide detergent, why not TVs, T-Shirts and Tramadol?
Wall Street analysts explored the topic with Kroger executives Thursday as the company revealed that it now offers home delivery from 300 stores.
“In some places we already offer (pharmacy) delivery,” Kroger CEO Rodney McMullen said. “If it becomes something that’s more important, we’ll be able to leverage it on the infrastructure that we’re putting in place with ClickList.”
Here are 3 things to know about the Cincinnati-based grocery chain’s home-delivery strategy:
1. It’s open to home delivery of prescription medications, something Amazon doesn’t currently provide. It’s also looking at pharmacy services as an entrée to new products that help consumers improve their health through dietary changes.
“Our 84.51 and pharmacy teams are really working hard, our health and wellness team is working hard on how do we help customers eat healthier on their terms because we know what flavor profiles people like,” McMullen said. “We’re actually doing things now and testing with our associates and once our associates give us feedback then we’ll expand and provide that to the customer as well. So we really feel good about the opportunity going forward.”
2. When it comes to e-commerce, Kroger remains a tiny David to the industry Goliath Amazon. But it grew digital revenue by 109 percent in the just-announced third quarter, driven by the rapid deployment of ClickList and home delivery.
McMullen said Kroger will have 1,000 ClickList locations by year end, where customers can order online and pick up their grocery orders at the store. That means it roughly doubled its total in the last year. It’s also partnering with Instacart, Uber, Roadie and Grocery Runners in Cincinnati to quickly expand home-delivery options, which are now available in 300 stores.
3. There are limits to Kroger’s digital expansion strategy.
“Not every customer wants things delivered to their house,” said Mike Schlotman, Kroger’s chief financial officer. “They’re still enjoying excitement of going out and shopping for things … We’re doubling down on food and making sure that we’re doing everything we can on food. We will start addressing things just beyond food but, first of all, we just want to make sure that we got food positioned appropriately.”