Just as speculation that the Kroger Co. (NYSE:KRC) was considering a takeover of Whole Foods Market Inc. (NASDAQ:WFMC) was getting wound up came word that online retailer Amazon.com Inc. (NASDAQ:AMZNC) was working on plans to open brick-and-mortar convenience stores and drive-in grocery stores.
The Amazon move could impact Kroger and its ClickList online order/store pickup service launched last year. As the moves and counter moves sort themselves out, investors think they see positive news in the offing.
Both Kroger stock and that of Whole Foods Market were up Thursday. WFM was up 4.9% and closed at $29.33 on 4 times normal trading volume. Kroger shares rose 1.8% and closed at $29.37.
This was especially good news for Whole Foods whose stock has lost more than half its value since 2013.
Kroger reported quarterly sales below Wall Street expectations last month. The company laid the blame on falling food prices. It also cut its capital expenditure forecast for this – not counting acquisitions by $500 million.
A Grocer On The Move
Despite a disappointing quarter, Kroger is one of the fastest growing retail companies in the U.S. Sales have nearly doubled over the last decade, thanks to an aggressive acquisition strategy on the part of the company.
Kroger tends to buy successful regional brands and allow the company to continue operating under its original name. While it’s not a surprise Kroger was mentioned as a potential Whole Foods acquirer, some analysts think the move wouldn’t make a lot of sense given the fact Kroger already has a solid organic line with an estimated worth of $11 billion in annual sales.
Meanwhile, as speculation about a Kroger takeover of Whole Foods Market continues, the Wall Street Journal broke a story about Amazon’s plans to open small convenience stores that would sell perishable staple items such as milk, produce and meat.
In addition to the convenience stores the company is allegedly also planning to open drive-in stores where customers could pick up groceries ordered online.
Kroger Already There
Interestingly, the Amazon plan is similar to Kroger’s ClickList online order and pickup service which the company launched last year.
According to Kroger CEO Rodney McMullen, customers like that system as much as home delivery. If true, competition between Amazon and Kroger could heat up as both companies compete for customers.
And Then There Was Wal-Mart
When an idea takes hold in retail it doesn’t take long for others to notice. Wal-Mart Stores Inc. (NYSE:WMTC) began a massive move in January into e-commerce with a goal of blending online and physical store shopping, much like the Kroger and Amazon models.
Although Wal-Mart gets more than half its U.S. revenue from food and groceries that area has been slow to move online. The company hopes to make up lost ground by introducing a service that lets customers order online and pick up in the store.