USA | Supermarket giant Kroger believes e-commerce could eventually account for 30 percent of its business, as it looks to convert more existing store customers to online shopping and improve digital profitability.
Speaking at Kroger’s October investor update, chief e-commerce officer Nate Faust said the company already had an US$18 billion online business but saw considerable opportunity for further growth.
Only one in seven Kroger store customers currently shops online with the retailer. Faust said many of these customers were already buying groceries online through competitors, presenting an opportunity to capture more of their spending.
Kroger expects to generate an additional US$500 million in e-commerce EBITDA by 2029, excluding retail media, through increased order volumes, improved fulfilment efficiency, and greater use of technology.
The strategy will make greater use of Kroger's existing network of approximately 2,700 stores, with in-store automation expected to reduce picking costs and improve delivery times.
Faust identified fresh food, delivery speed, and personalisation as priorities. Artificial intelligence will also be used to simplify shopping, help customers build their baskets, and provide more personalised recommendations.
Kroger CEO Greg Foran described the 30 percent online penetration figure as the company's best estimate over the next five to seven years, rather than a fixed financial target.
The company is also examining how store-based fulfilment could evolve as online volumes increase. Options include greater automation and micro-fulfilment within existing stores, while retaining traditional store picking for products that are less suited to automation.
Kroger's strategy places its physical store network at the centre of online expansion, with profitability dependent on increasing order density, improving productivity, and capturing more of the grocery spending of customers it already serves.
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