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Kroger promos healthier eats with OptUp app, in-store nutrition techs

BY Michael Johnsen

Kroger has big plans this summer around the utilization of in-store nutrition experts and its newly launched OptUp healthy shopping app.

Colleen Lindholz, president of the Cincinnati-based chain’s pharmacy division and The Little Clinic, said the initiative is part of an app update that will help tie a better-health-through-food program into the interactive platforms consumers are already using to navigate their shopping experiences.

“This is all in an effort to support the vision and mission that Kroger has, which is to help people live healthier lives,” Lindholz told DSN at the recent National Association of Chain Drug Stores Annual Meeting. “We’re trying to meet the customer where they are and where they want to be, whether that be in the store or digitally online.”

In stores, Kroger is piloting a program that will staff each supermarket with a nutrition technician through the agency Besomebody Paths. These “techs” will be engaging, customer-focused employees who will work to raise awareness around healthy food choices and the pair of licensed healthcare professionals — the dietitian and the pharmacist — who can help tie those healthier food choices into a comprehensive disease state management program. A total of 18 dietitians will be active across Kroger’s footprint, Lindholz said, one for each of its operating divisions.

Kroger also is building healthy food guidance into its OptUp shopping app, which launched on April 30. “OptUp takes the items you buy at Kroger on your Kroger Plus card and gives you a total [shopping cart] score that shows you how healthy your basket is,” Lindholz said. Each food item and its respective health value is loaded into the app, along with suggestions for healthier choices on similar products for their next shopping trip.

Kroger is employing an algorithm validated by the University of Cincinnati to score each item on a nutrition scale of 1-to-100. The corresponding suggestions are designed to take shoppers along their health journey at a more gradual pace. “We’re trying to help our customers make better food choices, but not go from A to Z overnight,” Lindholz said. “If I’m eating [cookies] for the last five years and that’s my snack, you’re not going to take me to broccoli or even grapes if [cookies] are what I love. What’s great about this app is it suggests items that are higher in nutrients, [but] not that much higher.”

All of this will lay the groundwork for Kroger’s future plans for its dietitians, pharmacists and the food side of its business under the “Wellness Your Way” platform. “Just like our Simple Truth brand has become a $2 billion brand, we want to tie wellness overall into one platform so it becomes seamless for our customers,” Lindholz said. “We’re working on a long-term predictive analytics tool and the power behind some of the big payers.”

Kroger did a soft launch of the platform in February and plans to introduce that platform in a meaningful way in 2019.

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E-commerce grocery sales expected to continue growth

BY Marianne Wilson

E-commerce grocery sales in the United States are projected to grow 10-times faster than in-store sales.

That’s according to Brick Meets Click’s newest sales forecast, which projected online as a percentage of total grocery sales will climb from under 5% at the end of 2017 to over 8% by the end of 2022. From a compound annual growth rate perspective, online grocery sales will grow 13% as compared to 1.3% for in-store sales (excluding the effects of inflation).

The report noted that while online grocery shopping promises to improve shopper outcomes in various ways, fulfilling the promise is still very much a work in progress, which creates challenges for growth.

For example:

  • One-in-five online shoppers can’t find everything that they want to buy. In-market performance trails pure-play providers in this area slightly, but that’s likely because in-market basket sizes are considerably larger.
  • What’s worse is when a customer puts an item in the cart, checks out, and expects to receive everything ordered only to find out something is out of stock. Reducing the difference between what’s ordered and what’s received is critical, especially for in-market providers, given the high frequency with which this occurs.
  • Other factors also affect shopper satisfaction, including the direct and explicit cost related to using online shopping options.

For the online grocery format to grow, shopping experiences need to improve so that active online shoppers recommend these alternatives to others, Bricks Meets Clicks advised.

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Walmart buys $16B stake in Flipkart

BY Marianne Wilson

In the largest acquisition in its history, Walmart has agreed to acquire India’s leading e-commerce retailer, Flipkart.

After weeks of speculation, Walmart said on Wednesday it has signed a definitive agreement to buy an initial stake of approximately 77% in Flipkart for $16 billion. The remainder of the business will be held by some of Flipkart’s existing shareholders, including Microsoft, Tiger Global Management, Tencent Holdings and Flipkart co-founder Binny Bansal.

Walmart’s deal with Flipkart greatly enhances the discounter’s position in one the world’s largest retail markets and gives it increased firepower against rival Amazon, which considers India one of its key global markets and was also reportedly looking to acquire the Indian company. Walmart said it expects India’s e-commerce market to grow at four times the rate of the overall retail industry. (Morgan Stanley estimates the e-commerce market in India will be worth $200 billion by 2026.)

“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of e-commerce in the market,” said Doug McMillon, Walmart’s president and CEO. “As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners.”

Walmart said it supports Flipkart’s goal to transition into a publicly-listed, majority-owned subsidiary in the future. Founded in 2007, Flipkart has led India’s e-commerce revolution. Flipkart’s supply chain arm, eKart, serves more than 800 cities, making 500,000 deliveries daily. In the fiscal year ended March 31, Flipkart reported sales of $4.6 billion, according to Walmart.

“The idea to have Flipkart be majority owned by Walmart but publicly traded is a smart move, and also helps explain the massive amount of money that Walmart paid for it,” commented Bryan Gildenberg, chief knowledge officer at Kantar Consulting. “As long as e-commerce companies continue to outperform in the market, it is easy to imagine that Flipkart will eventually be valued at much more than $16 billion.”

With the investment, the ecommerce company will leverage Walmart’s omnichannel retail expertise, grocery and general merchandise supply chain knowledge and financial strength, while Flipkart’s talent, technology, customer insights and agile and innovative culture will benefit Walmart in India and across the globe. Under the agreement, Walmart and the company will maintain distinct brands and operating structures. (Currently, Walmart India operates 21 Best Price cash-and-carry stores and one fulfillment center in 19 cities across nine states in India.)

“This investment aligns with our strategy and our goal is to contribute to India’s success story, as we grow our business,” said Judith McKenna, president and CEO of Walmart International. “Over the last 10 years, Flipkart has become a market leader by focusing on customer service, technology, supply chain and a broad assortment of products.”

Walmart’s investment includes $2 billion of new equity funding, which will help the brand accelerate growth in the future. Walmart and Flipkart are also in discussions with additional potential investors who may join the round, which could result in Walmart’s investment stake moving lower after the transaction is complete. Even so, the discounter would retain clear majority ownership.

The deal is expected to close later this year. Upon closing of the deal, the company’s financials will be reported as part of Walmart’s International business segment.

The transaction will reduce Walmart’s full fiscal year earnings per share by $0.25 to $0.30 if the deal is completed in the retailer’s second quarter.

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