Competition in the grocery sector features some notable regional specificities. In Florida for example, a substantial portion of the consumer population turns to the homegrown Publix chain for nearly all their shopping needs, making it difficult for other grocers to achieve competitive market shares. But Kroger is the largest grocery retailer in the country, and being shut out of the pantries and refrigerators of so many consumers by a regional competitor isn’t something it accepts easily.
In its ongoing attempts to compete more effectively, Kroger found a delicious opportunity when COVID-19 drove increasing numbers of consumers to experiment with and learn about the benefits of online orders and deliveries of groceries. Rather than try to build new brick-and-mortar stores and convince Floridians to forgo their beloved Publix sub sandwiches to shop at Kroger stores, it started building a massive customer fulfillment center outside of Orlando. The centralized location enables it to provide customers living in the Tampa-St. Petersburg metropolitan area, the Jacksonville region, and Orlando with next-day deliveries.
The facility features the latest, most cutting-edge robotic technology, along with control systems originally designed for air traffic control operations. The robots load trucks, which deliver the products to facilities, or spokes, located in Jacksonville and Tampa. From those spokes, vans take the groceries the last mile to customers’ homes or vacation rentals.
This latter point is key. As coronavirus travel restrictions ease, Florida anticipates that its robust tourism industry will rebound or even surpass prior levels, as people seek a break from the stress of sheltering at home for so long. Many of these visitors will be far more familiar with the Kroger brand, which is where they shop at home, than with Publix. Thus, they might prefer to be able to order the treats and snacks they know and love to supply their long weekend at the beach or week-long visit to the theme parks. Simply by going online and placing their order, changing only the delivery address, they can persist in their usual shopping habits, without having to learn a new store or consider alternative product options.
Discussion Question:
- Can Kroger establish a sustainable advantage as a grocery deliver service in these Florida regions, without physical stores? On the flipside, do physical retailers such as Publix need to enhance their delivery services to compete with Kroger’s new offering?
- Do vacationers represent a sufficient target market, or does Kroger also need to convince full-time residents to order from it?
Source: Sue Carlton, “Hey, Tampa Bay, Kroger Now Delivers Groceries Here. But How Does that Work?” Tampa Bay Times, June 26, 2021