Why Kroger’s entry to Florida is interesting?

Kroger is the biggest supermarket retailer in the US and one of the biggest retailers in the world. Yet it does not operate in the third most populous state in the US, Florida.

This is about to change. This time Kroger won’t be opening new stores, but they will serve Florida via warehouses built by Ocado.

This is an interesting approach from a traditional bricks and mortar grocery retailer. Online offers unique ways to do things differently. Geographical expansion is one example of that.

In the case of Florida, Kroger can easily operate online business that is not cannibalising the existing stores, but creating new revenue for the company.

Too often the development of online channels is hindered by the fear of cannibalisation to the existing businesses.

Florida is being dominated by the local giant Publix. The employee owned supermarket chain has an iron grip on the state with a seemingly clear lead in the market share. Walmart is said to be the runner up in terms of market shares. The image illustrates how heavily Publix is concentrated in Florida, as 829 (64%) of the company’s 1 286 stores are located in Florida. Walmart operates 385 stores in the state.

With warehouses and home delivery Kroger has an opportunity to reach big portion of the population in the state without building network of hundreds of stores.

The big challenge for Kroger will be to establish awareness and credibility without any physical presence.

There are flexible and focused tools for that, but it might become slow and expensive process. It will be interesting to follow how the Kroger’s Florida expansion progresses. If it is a success, company has said that it would use the same approach for entering some parts of the east coast.