Kroger thinks customers want online grocery shopping
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on February 06, 2016 at 6:45 AM, updated February 06, 2016 at 6:47 AM
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Kroger doesn't care if customers at two of its Michigan stores ever get out of their cars to shop for groceries.
The reason: A new program that allows online ordering with curbside pickup.
The program — called ClickList — launched at the Northville store in northwest Wayne County in December, then expanded this week at a store in Roseville, northeast of Detroit.
By the end of 2016, about 10 stores in Michigan will offer the service.
"Early feedback has been absolutely extraordinary," said Ken McClure, Michigan consumer communications manager for Kroger about the Northville store.
One customer told him that her usual weekly Kroger shopping trip takes 90 minutes; her use of ClickList cut that to 20 minutes.
"Depending on the size of your average basket, all of that time is going back to your schedule," McClure said.
The move by Kroger to expand this program, which started last summer and now can be found in 36 stores, comes as other grocers look to increase convenience and shopper loyalty.
Among the stores launching curbside service in the last year is Meijer, the Walker-based chain that started with 8 stores and plans a rollout to all 222 of its stores in six states.
Publix dropped curbside pickup in 2012, but Walmart tested curbside pickup in 2015, adding it in 10 markets and planning to add more in 2016, even as the retailer forecasts flat sales.
What it means for Walmart, according to reports, is higher sales from shoppers who use a combination of curbside pickup and in-store shopping. Test sites showed those shoppers spent an average $2,500 per year at Walmart, compared to $200 for online only and $1,400 for in-store.
The grocery industry — which in the third-quarter of 2015 had an average net operating margin of 0.79 percent — is highly competitive, with technology and encroachment from online and discount retailers. At the same time, more specialized stores are attracting shoppers, prompted major grocers, in turn, to add more specialty and organic products. About 40 percent of food in the US is bought at a traditional grocery store, according to industry estimates.
According to a 2014 study by The Hartman Group, shoppers' "loyalty to a single 'primary store' is giving way to a diversity of stores.'
At Kroger, McClure said, ClickList lets the store "engage our customers the way they choose to be engaged."
Stores are going through modifications to set up a staging area for the online orders near the entrance. Staff shops for items, which are then stored in appropriate locations, like in a cooler, and packaged with a scannable bar code so that orders can be assembled quickly for pickup.
ClickList has dedicated staff in both Northville and Roseville that have been trained to fulfill the orders, McClure said. They do the shopping for the customer, based on their online order that could be brand- or size-specific, or more general. Specialty products, like meat or seafood, are "hand-selected by the department head," McClure said.
"I think that's really what makes the difference in terms of the quality of the customer experience," McClure said. "This is new, and an important part of our business."
The first three ClickList orders are free for Kroger Plus customers. After that, each order is $4.95. Most items are eligible, but cigarette, prescription and alcohol purchases cannot be part of the order.
Kroger's value is estimated at about $36 billion, based on the market capitalization of its stock price. Its revenues topped $108 billion in its last fiscal year.
The company, based in Cincinnati, Ohio, employs 400,000 in its 2,600 stores across 34 states. It has 19,000 employees in its 127 stores in Michigan.
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