Kroger has made a big bet on e-commerce. Although its digital channels are not yet profitable, it cites steady rises, of about 15 percent annually, in its online sales. Furthermore, digital sales rose more than 10 percent in a single, recent quarter. The company earned $13 billion from online retailing in 2024. Encouraged by such trends, Kroger is plunging ahead and experimenting with some other options for achieving its e-commerce goals.

That exploration appears inspired by the example set by some of its best known competitors. In particular, it invested heavily in completely overhauling its delivery operations, to make it quicker, easier, and more convenient for consumers to have their groceries delivered or click to shop. Noting that wait times have decreased across the board, Kroger anticipates that it can attract new shoppers. Furthermore, it created a new e-commerce business unit. The recently announced department, headed by the firm’s former chief digital officer Yael Cosset, will focus on expanding Kroger’s online footprint even further, particularly in relation to its grocery delivery and pickup options. A parallel investment is dedicated to developing more personalized recommendations, tailored to each user’s documented preferences.

Notably, prior to this appointment, Cosset was responsible for the in-house data service that Kroger manages. In this role, he was able to track customer data and exploit advanced analytics to develop more precise shopping suggestions, which in turn powered Kroger’s retail media advertising efforts. It seems likely that such tactics and relevant experiences will be instrumental to the new e-commerce division. The announcement also follows after some recent challenges to Kroger’s technological success. One partnership with a logistics specialist appeared to have stalled, due to unanticipated challenges that made it impossible to design automated warehouses. In turn, Kroger paused its rollout of new fulfillment centers, though it still hopes to have them operational by 2026. In the meantime, Kroger has undertaken a comprehensive review of all its customer fulfillment operations, seeking insights that can inform its future decisions. It has indicated its willingness to make tough choices, such as closing underperforming locations and shrinking its employee base.

Such choices likely need to be made promptly. The grocery sector is not getting any easier; Kroger’s main competitors, including Amazon, Walmart, and Costco, are actively leveraging their own unique competitive advantages to ensure their profitability. Whether Kroger chooses to focus its strategic efforts on opening new facilities, developing its retail media network to earn more advertising revenue, or shifting away from e-commerce to prioritize its in-store operations, it needs to do something. Otherwise, it risks being left behind for good.

Discussion Questions

1. What kinds of technologies might Kroger’s new business unit develop and implement to make grocery deliveries and pick-ups more efficient?

1. What distinguishing characteristics or offerings can and should Kroger point to, to encourage shoppers to prefer it over other grocery retailers?

Sources: Sam Silverstein, “Kroger Is Striving for E-Commerce Profitability. What Will It Take to Get There?” Grocery Dive, July 2, 2025; Sam Silverstein, “Kroger Launches E-Commerce Business Unit,” Grocery Dive, March 11, 2025; Adam Blair, “Kroger Sharpens Ecommerce Focus with New Business Unit,” Retail TouchPoints, March 12, 2025; Thorvardur De Shong, “Kroger Launches E-Commerce Division to Boost Online Growth,” Mass Market Retailers, March 11, 2025; Timothy Inklebarger, “Kroger Goes All In on Ecommerce,” Supermarket News, March 12, 2025; TipRanks, “Kroger Announces Creation of New eCommerce Business Unit,” Yahoo! Finance, March 12, 2025.