My main point was that Kroger may not have been reacting to Amazon, even though it seemed to change around the same time they (Amazon) announced they would buy Whole Foods Market. But there must have been something to change Kroger so radically in the course of a few years.storewanderer wrote: ↑February 9th, 2020, 9:37 pmThe biggest thing is Amazon says it may do something and it sets shockwaves through the grocery industry. Look at all the initiatives Kroger has been doing the past couple years to try to catch Amazon. Is Amazon even selling any more groceries now than they were a year or two ago? I'm not so sure. But Kroger has sure shifted a ton of capex spending to trying to combat Amazon, much to the detriment of their existing store base/store base expansion opportunities. All because Amazon says it will expand Whole Foods, or open hundreds of grocery stores, or says something else along those lines. All Amazon has to do is talk to set an established chain into a major strategy shift.
In 2015 and 2016, Kroger was on top of things. While Albertsons was fiddling with its new purchase of Safeway, Kroger still smoked the combined company in terms of stores and earnings. They were building new "Marketplace" stores across all divisions, which despite stating not competing with Walmart, was getting close to it as they were able to drop their food prices and re-merchandise the stores (goodbye furniture, hello clothing). They made plans to enter Hawaii and bought Roundy's toward the end of the year, giving them the Milwaukee market and Roundy's top-tier Chicago supermarket, Mariano's, which made Jewel-Osco look dowdy and boring. They purchased a stake in Lucky's Market, which seemed like a growth vehicle, and opened a few smaller prototypes, including Fresh Eats MKT in Ohio (a 12k square foot convenience store/grocery store hybrid) and Main & Vine (in a former QVC).
And then things started to go off the rails around mid-2017, with Kroger announcing a series of new technology initiatives that would change the company. The Marketplace stores, which had already been slowing, dried up with almost no new stores being built. The entire convenience store division was off-loaded. Visa cards were briefly banned at Smith's. A push for delivery-based services was created, including buying Home Chef. Fred Meyer started to get slowly whittled away. Divisions became more similar to each other instead of more decentralized. Lucky's turned out to be a big loser and announced that they would close down nearly all of their stores, practically overnight. Cap-ex was cut, smaller markets were discarded, and the stores have noticeably suffered as a result.
To blame this solely on reacting to Amazon (which, despite the WFM purchase did not exactly revolutionize the grocery market) would only make the leadership of Kroger look worse, willing to throw away years of hard work getting Kroger (and its brands) to where they are today all for chasing "technology initiatives" is absurd.
So what happened? Did Kroger have some sort of executive shuffle that wasn't well-publicized?