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Our Krogers is great. Always make any problem right. Leave something in the cart? They replace it no questions asked. Rain checks? Just ask. Store is sparkling clean and staffed with friendly people.
I'm not being one tiny bit snarky when I say I'm happy you're having a good experience at your Kroger. However they are having issues considerately more problematic than items being left in carts and issuing rain checks (although that seems to indicate a supply chain problem). Friendly employees are an invaluable resource but only gets you so far if the folks on the top floor on Vine St. can't/won't make good decisions to support their efforts. I suspect with today's haircut there will be even fewer hours spent at store level to aid great store employees.
Our Krogers is great. Always make any problem right. Leave something in the cart? They replace it no questions asked. Rain checks? Just ask. Store is sparkling clean and staffed with friendly people.
Agreed. At our store, you can always find the manager walking around checking on people. I don't see Amazon seriously threatening Kroger anytime soon. That's just what the talking heads want you to believe - Amazon is going to put everyone out of business. Not! If the day ever comes when people only order groceries online, Kroger will be well positioned to compete with other grocers and Amazon.
I've always had good experiences at any Kroger I've shopped at including Indianapolis area stores where I had a lot of problems at the now defunct Marsh chain. I much prefer shopping in a local retailer vs. buying online. The only time I buy online is if I can't find something in the local area or the price at a local store is outrageously high. If the price differential is not all that much I buy local.
Not sure how Amazon could effectively compete for grocery shoppers unless they open up stores to compete. Even delivery from a warehouse will require time and could result in products not arriving "quite right" to the customer. To be cost effective multiple deliveries need to be sent out with the same driver which can lead to potential time issues for some people.
I've always had good experiences at any Kroger I've shopped at including Indianapolis area stores where I had a lot of problems at the now defunct Marsh chain. I much prefer shopping in a local retailer vs. buying online. The only time I buy online is if I can't find something in the local area or the price at a local store is outrageously high. If the price differential is not all that much I buy local.
Not sure how Amazon could effectively compete for grocery shoppers unless they open up stores to compete. Even delivery from a warehouse will require time and could result in products not arriving "quite right" to the customer. To be cost effective multiple deliveries need to be sent out with the same driver which can lead to potential time issues for some people.
I'm not trying to be contrary, trust me I have money tied up in Kroger and I want to see them do well but do you understand how supply chain logistics work? Pragmatically there's going to be very little difference in terms of freshness (which I assume is what you mean by not quite right) from where Kroger sources their products than where Amazon does, at least in 'fresh' categories. Probably from the same farms, going through the same warehouses. Direct to consumer frankly cuts out a step where things might not be right (less handling) if for no other reason than online retailer's know very well that's probably the biggest concern folks have... funky foodstuffs someone else pick out for them. They take great care to avoid it happening. If they don't, no more business. B&M's make the customer responsible for not dropping something skanky in the cart and are in a position to benefit if they do. Less stuff tossed out as unsaleable. Aldi avoids the issue altogether by limiting those SKU's.
You're welcome to buy into the theory that online or limited selection outlets products are inherently inferior (Kroger is counting on it) but fewer and fewer people accept that. That's not to say services like AmazonFresh are not without problems, but then they've only been doing it for a few years vs. when Barney Kroger sold his first sack of peaches in 1883. Your welcome to not believe me but the stock market seems to say otherwise. Better yet, let's hear what McMullen talks about at the shareholders meeting. Will it be excuses or specific action plans?
Isn't Kroger largely a union shop? I worry, especially when I read about the new building, that Kroger is increasing fixed costs in the face of a competitive deluge.
I'm an investor in Kroger, and am wondering if today's swoon is a great buying opportunity, or foreshadowing a grinding decline. Check out the 5-year chart here.
I follow the grocery & food distribution business for a living. Exactly what "new building" have you been reading about? The new proposed store in downtown? As an investor, I think it can be run profitably. They've been studying a downtown store in Cinti for years, and this one is literally across the street from their HQ, and have learned a lot about urban stores with recent acquisitions including Marianos. Plus, the CAPEX to build it is a speck of dust on their cash flow statement. You're really concerned about 1 store opening with a retailer with $110 billion of annual sales and $22 billion of net income?????? Come on.
KR and WMT are the only 1,000 lb. gorillas in the grocery space. Everyone else is chasing them. Macy's on the other hand is considered a dinosaur by their online and fast fashion brick & mortar competitors. I think Macy's survives longterm, but they will divest many stores over the coming years.
NO ONE has learned how to make money selling groceries on-line. AMZN will one day get there---but it's years away. Many many challenges including 1) how do you get perishables like milk and produce to people's front doors without it spoiling (how do you get milk to a house in Phoenix when it's 110 degrees?) What if no one's home? You can't leave it on the front steps, can you? Consumers still want to pick out their own produce and many other groceries.
Exactly what "new building" have you been reading about? The new proposed store in downtown?
Thanks for asking about this. I don't why (actually I do, but it's irrelevant to this discussion), but I was under the wrong assumption that Kroger was the tenant in a new 18-story OFFICE tower. This would have implied a long-term lease. You're correct that the commitment is only for a store in an 18-story APARTMENT building. This recognition eliminates one of my concerns.
Quote:
Originally Posted by flashes1
KR and WMT are the only 1,000 lb. gorillas in the grocery space. Everyone else is chasing them. Macy's on the other hand is considered a dinosaur by their online and fast fashion brick & mortar competitors. I think Macy's survives longterm, but they will divest many stores over the coming years.
Aldi and Lidl are gigantic, INTERNATIONAL firms. Aldi, unlike other European grocers in the past, has successfully solved the U.S. market with its business model. The jury still is out on Lidl, just now entering the market.
My investing philosophy is greatly influenced by the "invest in what you know" principle of the legendary Peter Lynch, a "Master of Wall Street."
I remember when Kroger was a major player in the northeast Ohio grocery market, but exited the market decades ago. It always perplexed me why KR never re-entered the market, but I suspect that Kroger decided there were better opportunities than competing with the Marc's discount grocery chain. My current favorable impression of Kroger is based on my knowledge of its operations in the Columbus market, but I can't shake the memory that it didn't survive the northeast Ohio market.
In recent years, Aldi has become a significant player in the northeast Ohio market, and I've witnessed how Aldi improved their product significantly over the years -- eliminating long check-out lines and recently accepting all credit cards (Marc's in response, now also accepts all credit cards). Many Aldi house brands offer excellent value, such as potato chips at $1.49 to $1.79 every day prices for about a 9 oz. package, or six English muffins for 99 cents. Kroger obviously already competes with Aldi in some markets, but now Aldi is targeting new Kroger markets (Los Angeles) and surely Lidl will do the same.
Losing marginal sales in a low margin business is a serious business challenge for any grocer. With their emphasis on small, local stores, Aldi and Lidl have an advantage over their big box competitors if the cost (including travel time) becomes greater -- e.g., carbon taxes, higher fossil fuel prices, autonomous car sharing, etc.
Quote:
Originally Posted by flashes1
NO ONE has learned how to make money selling groceries on-line. AMZN will one day get there---but it's years away. Many many challenges including 1) how do you get perishables like milk and produce to people's front doors without it spoiling (how do you get milk to a house in Phoenix when it's 110 degrees?) What if no one's home? You can't leave it on the front steps, can you? Consumers still want to pick out their own produce and many other groceries.
I'm not certain Amazon makes money on many of the products it sells, but that hasn't stopped it from impacting one retail market after another.
Obviously, refrigeration solves the perishable issue. Are you aware of Schwan's??? They've been at it for decades, so your "NO ONE" claim would seem inaccurate.
Working persons that I know who use AMZN for groceries in urban markets don't order perishable items. Homebound baby boomers and others will consider home delivery a blessing, especially if it helps obviate the need for a personal vehicle. I don't believe Kroger can afford to be a non-player or second fiddle in this market segment in the long run.
Kroger's is not a significant piece of my portfolios. It has been a small part of a buy/write (call) dividend strategy. KR's price collapse yesterday has necessitated a consideration of its recovery potential and whether an additional commitment is worthwhile.
Because a big chunk of KR's GAAP quarterly under-performance was due to a conservative, LIFO charge, I'm not as concerned about KR's short-term positioning as its future competitive posturing.
The positive investment thesis for KR is that earnings will recover with food inflation, beginning in H2. E.g., the badly incorrect Oppenheimer analyst maintains a $38 price target on KR, but several analysts have much lower price targets (e.g., $30). In this interview, the Oppenheimer analyst admitted that KR will meet its competitors' (WMT) price cuts. KR does not match Aldi prices in the Columbus market, however.
KR's somewhat high price/book value ratio and somewhat low dividend yield are concerns for my value alter ego.
As with many Kroger investors, I've been waiting for food inflation to impact KR's earnings positively.
The issue is whether Kroger can grow REAL same store sales. Are you highly confident that Kroger will be able to do so? Why, given the mounting competitive environment? Would you be surprised if KR tests the $20 price level this summer???
I'm not trying to be contrary, trust me I have money tied up in Kroger and I want to see them do well but do you understand how supply chain logistics work? Pragmatically there's going to be very little difference in terms of freshness (which I assume is what you mean by not quite right) from where Kroger sources their products than where Amazon does, at least in 'fresh' categories. Probably from the same farms, going through the same warehouses. Direct to consumer frankly cuts out a step where things might not be right (less handling) if for no other reason than online retailer's know very well that's probably the biggest concern folks have... funky foodstuffs someone else pick out for them. They take great care to avoid it happening. If they don't, no more business. B&M's make the customer responsible for not dropping something skanky in the cart and are in a position to benefit if they do. Less stuff tossed out as unsaleable. Aldi avoids the issue altogether by limiting those SKU's.
You're welcome to buy into the theory that online or limited selection outlets products are inherently inferior (Kroger is counting on it) but fewer and fewer people accept that. That's not to say services like AmazonFresh are not without problems, but then they've only been doing it for a few years vs. when Barney Kroger sold his first sack of peaches in 1883. Your welcome to not believe me but the stock market seems to say otherwise. Better yet, let's hear what McMullen talks about at the shareholders meeting. Will it be excuses or specific action plans?
Yes, I have some understanding of Supply Chain Logistics. I have worked in the Logistics industry for many years. Everything from scheduling freight and shipments to delivery and customer service. I've also been in retail and fast food management.
Online food delivery other than from a restaurant is not likely to be overtaking the traditional supermarket any time soon, if ever at least in our lifetime. Lower prices does not equate to better service or better products. Personally I don't want someone I do not know picking out fresh fruits or veggies for me. I won't buy anything of that nature sight unseen. Once in a while I do order some food products online but only if I can't find them locally. And as someone else pointed out and referenced vaguely in my previous post, frozen and refrigerated foods being bought online presents another set of issues.
Local supermarkets in some areas of the country are already providing delivery service to local areas. Ultimately that will allow them to stay in business by tapping into the delivery market for the people that don't have the time, inclination or ability to shop on their own. Probably the only place in which Amazon can really excel in this regard is rural areas that don't have a supermarket within a few miles of their location. But they will pay dearly for delivery service.
One other intangible I should add. Service. A customer is likely to shop and spend money in a business if they receive good service from the store personnel. Even if it means paying a bit more money most people will gladly spend the extra money to receive personalized attention and quality. People don't want to deal with staff members that are rude, lazy and incompetent. This is one of the reasons why Marsh is going under. I shopped at their stores but got fed up with several of their stores for those very reasons. Sadly, I find this kind of poor service in many Indianapolis area businesses and I no longer utilize them. Thankfully I won't be working there much longer and won't have to use any services in that area much longer. I have far less problems in the Cincinnati area and this holds true with any other area of the country I've lived or worked.
Kroger will be just fine. They've been around long time and have adapted to changing market conditions each and every time. As long as the company still has effective managers at the top making smart decisions on existing market conditions and then seeing what will be happening a few years down the road, the local Kroger won't be going anywhere.
Never guessed that AMZN would commit to brick-and-mortar by buying Whole Foods, a body blow to Kroger given Amazon's lack of emphasis on short-term operating profits.
Kroger's share price fell another 15 percent to 21 at the open today. Home delivery of groceries soon will be a reality in much of America, and Kroger will struggle to ever compete profitably in this market segment.
Kroger now must get very serious about efficiency and cost cutting because it's now dead center in perhaps the greatest retail war in history. My hunch is that Kroger is merely collateral damage in Amazon's tactical decision to cripple main competitor Wal-Mart in Wal-Mart's largest revenue segment.
This capital allocation by AMZN ironically may take pressure off the likes of Macy's. E.g., will AMZN now have to collect sales taxes in states where Whole Foods has a tax nexus, but AMZN does not?
Last edited by WRnative; 06-16-2017 at 08:16 AM..
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Wow! Amazon purchases Whole Foods
