If ever there was confirmation that traditional brick-and-mortar grocery stores see the impact online grocery shopping could have on their bottom line — Walmart and Kroger have provided just that.
As Walmart continues to ramp up their offerings online to include traditional grocery items like produce, Kroger has made a major purchase in an effort to jump on the home delivered meal kit bandwagon.
Kroger did so with the purchase of Home Chef, the first company, according to Drover’s editor Greg Henderson, to turn a profit in the home meal kit industry. He also said there are inherent problems with the business model.
“The repeat business [has been a downfall], especially for subscription services, is a lot like buying exercise equipment — they start getting subscriptions and they start getting behind,” said Henderson, “One study shows that Hello Fresh only gets 17% percent repeat business.”
AgriTalk host Chip Flory is most curious about how online shopping is going to affect the supply-demand chain that exists under the status quo of traditional grocery shopping.
“Retailers are going to take a hard look at how the logistics of it are working, and go to more of a central distribution facility,” said Pamela Riemenschneider, editor of Produce Retailer Magazine. “It doesn’t make sense to stock that stuff in retail locations…they will have to move to a more centralized system.”
Henderson said a quarter of the world’s current population hasn’t lived without social media, and their consumer trends may ultimately determine the success of things like online grocery shopping and kit meals. However, Riemenschneider did say that Gen Xers shouldn’t be ignored, as they generally have the most children and prefer the convenience.
On Tuesday’s AgriTalk, Pro Farmer policy analyst Jim Wiesemeyer catches up with the latest in Washington after the long weekend. He said that another farm bill vote in the house may be sooner than anticipated.
Farm Journal Editor Rhonda Brooks previewed upcoming Yield Tour events, including one next week in Ft. Collins Colorado. AgriTalk will be live from those locations in the coming weeks and months.
You can catch the full conversation on AgriTalk by clicking on the player above.