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Kroger Gains Edge, Food 4 Less Brings Home Delivery Service

Zacks Equity Research

In a bid to enhance customers’ shopping experience and stay competitive, The Kroger Co. KR has been aggressively undertaking various strategies. In sync with this, one of the company’s subsidiaries Food 4 Less initiated home delivery service in collaboration with Instacart at all 129 Food4Less/FoodsCo. locations in California, Illinois and Indiana. Groceries will be delivered at the customers’ doorstep on the same day at their preferred time.

The company’s shoppers can choose from 40,000 offered products and place their orders through “www.food4less.com” by clicking on delivery option. After customers have placed their order, they can select a favored delivery time between 8 a.m. and 9 p.m.

Kroger    is trying all means to gain lead in the grocery delivery race, and aggressive expansion of same-day delivery is one of the ways. Apart from providing the best shopping experience to the customers, this move is also seen as part of the company’s strategy to better compete with Walmart WMT, Target TGT and Amazon AMZN.

Meanwhile, the company has started using Nuro’s fully autonomous, driverless R1 vehicles for grocery delivery services. Earlier, it inked a deal with British online grocery delivery company, Ocado that reinforces its position in the online ordering, automated fulfillment and home delivery spaces. The company also acquired meal kit provider Home Chef. It also launched a grocery delivery service “Kroger Ship”.

Certainly, this Zacks Rank #3 (Hold) company is leaving no stone unturned to attract consumers and attain incremental revenues. It is well poised to boost market share by expanding store base, and introducing new items, digital coupons, and order online, pick up in store initiative.

Industry experts believe that the competition in the U.S. grocery market is going to intensify further in the digital space, and supermarket chains will have to constantly revisit their strategies to endure the same. This means either you “shape up or ship out”, and Kroger has taken stock of the situation.

In spite of these endeavors, shares of Kroger have plunged roughly 14% and underperformed the industry that advanced 9.1% in the past three months. The stock came under pressure following the company’s first-quarter fiscal 2019 results, wherein both the top line and the bottom line continued to decline year over year. Also, identical sales (excluding fuel) growth rate decelerated during the quarter under review. The timing of SNAP disbursement adversely impacted identical sales results by 15 basis points. (Read: Kroger's Q1 Earnings Surpass Estimates, Decline Y/Y)

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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