With the amount of regular foot traffic food shoppers generate, the battle for grocery dominance could determine the retail winners and losers. And as has been the trend lately, retailers are eyeing partnerships to ensure they come out on top.
The latest development, according to Fast Company, is a possible merger between Target and Kroger. The grocery chain is the second largest food store by market share behind Walmart, the biggest single player in a fractured space, according to CNBC.
For Target, teaming up with the supermarket could help it better compete against Walmart and Amazon. Though Amazon and Whole Foods combined only represent a sliver of the market, the online behemoth’s dominance overall gives it outsized sway over suppliers—which it’s starting to exercise as the one-year anniversary of the acquisition approaches.
Kroger, on the other hand, would get a much-needed boost from Target’s e-commerce infrastructure, which powered online sales to 29-percent growth during the fourth quarter.
Neither Target nor Kroger have responded to the reports, but CNBC has weighed in, saying a merger is not on the table. According to its sources, the two companies are considering a deal but only for a partnership with Shipt, the same-day delivery service Target purchased in December.
Either way, the discussions between the two underscore the importance of groceries going forward. And with so much at stake, more of the major chains are looking for ways to beef up their food businesses.
Earlier this month, Kohl’s announced it would be making room for German grocer Aldi, bringing it into as many as 10 of its stores as it attempts to boost productivity in its stores.
Not only are grocery shoppers typically more frequent shoppers, but Walmart has found they also spend more—in part due to the inevitable add-on items that often result from that trip to the store. As a result, the big-box chain announced plans this month to double its online grocery pick-up locations by adding 1,000 locations. The company is also experimenting with grocery delivery, which it’s expected to expand to 100 markets this year.