Kroger’s Threat to Walmart, Target, Costco and Amazon Revealed

Kroger (NYSE: KR) has ambitious plans to take on Walmart (NYSE: WMT), Target (NYSE: TGT), Whole Foods Market (NASDAQ: WFM), Costco Wholesale (NASDAQ: COST) and even Amazon (NASDAQ: AMZN).

The extent of those plans is revealed in a short photo essay that Hayley Peterson of Retail Market Solutions did for Business Insider. Peterson visited three of Kroger’s gigantic Marketplace stores in the Richmond, Virginia, area and what she found was impressive.

Here are just a few of the details of the Kroger Marketplace that should scare competitors:

• The typical Marketplace is between 100,000 and 145,000 square feet in area. Smaller than a Walmart Supercenter but large enough to serve as a fulfillment center.

 

• The fresh produce department at the Marketplace is one of the largest and best organized amenities in the tore.

• A Marketplace contains several prepared-food counters including a sushi bar. This makes Kroger a potential threat to a wide variety of restaurant operators including Chipotle (NYSE: CMC) and Domino’s (NYSE: DPZ).

 

• The fresh meals available from the Marketplace include pizza, sandwiches and burrito bowls all made to order.

 

• The fresh food area has some of the latest technology including touchscreen ordering, a self-service beverage bar and its own dedicated checkout area.

 

• There’s an impressive liquor store with 500 types of beer and 2,000 types of wine. That looks like a direct challenge to Costco’s liquor business.

• There’s even a wine bar with beer on tap another shot across Whole Foods bow. Whole Foods has tested wine bars in its stores in some areas.

 

• There is a large selection of kitchen appliances, home goods and electronics.

 

• The clothing department is nearly as large as the produce department.

 

• There’s also a large shoe department with most items priced under $20.

 

• The Marketplace even has dressing rooms for clothing, a jewelry store and a Starbucks.

• To add icing to the cake there’s a medical clinic and a toy department.

 

• Some Marketplaces also feature a furniture department.

 

All this looks like a major threat to Whole Foods, Costco, Target and Walmart because it seems to offer more amenities in a nicer environment than some of those stores. If it can be combined with added incentives like Kroger’s Fuel discount program and discount coupons it’s a real menace to other brick and mortar stores. Even brands like Macy’s (NYSE: M) and Dollar General (NYSE: DG) are threatened by the Marketplace.

How Kroger’s Marketplace Threatens Amazon

The Marketplace is also a potential threat to Amazon because it could be used as a combination store and fulfillment center; something that Kroger’s King Soopers subsidiary is already experimenting with in Denver. I’ve actually been shopping there and seen employees pulling online orders from the shelves.

If that could be combined with an app based delivery service like Uber Eats or Alphabet’s (NASDAQ: GOOG) Google Express it’d be an even bigger menace to Amazon. By using Uber or Lyft, Kroger could scale up a delivery service to threaten Amazon and Walmart and its new subsidiary Jet pretty quickly. Walmart is already experimenting with such a service in Denver with Lyft, in Miami with Deliv and in Phoenix with Uber.

It looks as if Kroger is well-positioned to take advantage of the changing retail landscape. If it can roll out the Marketplace nationwide; the super grocer will be in a position to become America’s largest food retailer within the next two decades.