Groceries are hot, as evidenced by the presence of seven food retailers among the food-drug-mass merchants who increased market share last year. Amazon.com and Dollar General represent the general merchandise sector, though each has been ramping up food offerings in recent years. Amazon emphasized its intentions in June with the $13.7 billion offer for Whole Foods Market.
CVS is primarily a drugstore chain with a large convenience store’s worth of food in each location; even Total Wine & More’s merchandise offerings overlap those of many supermarkets.
Kroger is the standard bearer for traditional supermarkets and is doing a little bit of everything. The company acquired a former Macy’s department store location in Ohio with the intention of testing how well one of its supermarkets would do in a mall environment, and has jumped on the meal kit bandwagon with a pilot program at four stores in its home market of Cincinnati.
Dubbed Prep + Pared, the meals for two adults can be made in 20 minutes or less at a cost of $14 to $18 without the need of a subscription. “Kroger continuously looks for ways to make our customers’ lives easier,” says Vanessa Egle, senior director of culinary strategy and development for Kroger. “They have told us they want fresh, convenient and affordable meal solutions.”
There is only so much Kroger can do, however, to stem the tide of events pushing food prices down. These include lower producer costs; product surpluses; price wars fostered by Amazon’s expanding presence in supermarket merchandise and Walmart’s response to that; the proliferation of low-cost Aldi stores all around the country; and the impending invasion of Lidl, another low-cost operator from Germany.
“There certainly doesn’t seem to be one thing causing prices to decline,” says Steve Reed, an economist with the Bureau of Labor Statistics’ Consumer Price Index program. “There are several factors at work.”
Source: Kantar Retail