There have been a lot of fears over the supermarket sector over the last couple years. Especially since Amazon’s acquisition of Whole Foods last year, investors have been shy about grocery stocks and how that model may be disrupted. This has led to some steep discounts, but perhaps none is more attractive than Kroger. Despite fears, the grocer seems to have a solid position in the market, especially given that supermarkets are still consumers’ favorite channel. One market analyst says that “People are overly concerned about Amazon and groceries … The industry has faced disruption for 25 years, with companies like Costco Wholesale (COST) and Trader Joe’s, and it has been positive for Kroger. Disruption stirs things up and creates opportunities”. Kroger is currently the number two grocer in the US.
FINSUM: One of the very interesting things to note is that Amazon is now scaling back its grocery delivery business as consumers have not liked it as much as the click and collect services of Walmart and Kroger. Has grocery delivery died before it really began? Good news for traditional grocers.