Image Credit: Kyle Sorkness
Everyone has to go out and buy groceries, right? Well, it turns out that at one time that would have been a correct statement; however, these days things have changed and now customers have many choices on how they can get the groceries that they need. This change has hit grocery store product managers very hard. All of a sudden they find themselves having to change their product development definition, overhaul their operations, and having to invest in new technologies and talent in order to find ways to keep their customers from shopping at Amazon for their groceries. Oh, and they also have keep food prices low because that is what their customers expect. How are grocery story product managers going to accomplish all of this?
The Challenge Of Being A Product Manager At Kroger
One of the largest grocery stores, Kroger, has 2,764 stores. They are also a very conservative company. What this has meant for their product managers is that the store has been slow to adapt to the changing grocery store marketplace. Even as their completion was investing in online ordering technology and starting to provide delivery services, Kroger instead focused on their stores. This is not going to look good on anyone’s product manager resume.
It turns out that online ordering and delivery of groceries has been around for a long time. However, it has never really caught on. One of the reasons was that customers generally live close to grocery stores and they prefer to pick out their own food. This is starting to change for two reasons. More young people are starting to form families and therefore have less time to go grocery shopping and older customers are starting to become more comfortable with shopping online. One of the most popular options that grocery stores can offer is the ability to order online and then pick up the groceries by driving to the grocery store’s parking lot. Online sales of grocery products currently only account for roughly 5% of the US$1 trillion U.S. food and consumer product market. However, this part of the market is growing at a rate of 40% annually while in store sales have been flat for a number of years.
Kroger is now seeing a lot of new competition in the grocery business. Several years ago Walmart become the largest seller of food in the U.S. Kroger remains the largest supermarket chain by both number of stores and sales. Walmart purchased Jet.com to improve its online grocery sales. Target purchased Shipt Inc. which was a grocery delivery service. Amazon entered into the grocery business when it purchased Whole Foods. Realizing that they have an issue on their hands, the Kroger product managers have now budgeted $4B to invest in warehouses that will be managed by robots, a meal-kit company and digitally enabled shelves.
How Kroger Plans On Surviving and Thriving
One of the biggest problems that the Kroger product managers have been facing as they search for ways to deal with the changed grocery marketplace is the simple fact that Kroger doesn’t really want to change. Kroger managers are motivated to remain focused on their stores. The sales that happen at a store determines a manager’s compensation and their chances to get a promotion. One of the issues that the product managers have had to deal with is the fact that store managers view online sales of groceries as just creating extra work and distracting the company from finding ways to maximize their store revenue.
Kroger does realize that it has a problem. As a step towards addressing this issue, the Kroger product managers were able to convince the company to acquire a company called Vitacost.com. Vitacost.com was an online retailer of both natural foods and supplements. However, after they had purchased this firm, Kroger was slow to integrated Vitacost’s technology into Kroger’s operations. This delay frustrated the Vitacost workers and caused many to leave. Kroger was slow to add a link to Vitacost to the Kroger website. Additionally, there was a conflict over allowing Vitacost to accept Apple Pay or PayPal.
Kroger’s product managers understand that they need to do more and they have to do it faster. Going forward, Kroger has started to work with IBM, Oracle, and Microsoft. The product managers are also starting to spread the word about Kroger to potential tech startup partners. Kroger has started to work with Ocado Group who is a U.K. based automated-grocery company. Kroger is learning from them at the same time that Ocado is learning from Kroger. Kroger has also been able to reach a deal with InstaCart. InstaCart now makes deliveries from 1,600 Kroger stores. The Kroger product managers want to be able to expand their online-pickup locations; however, at the same time they need to be careful that their traditional store customers don’t start to feel as though they are being neglected.
What All Of This Means For You
Selling groceries is big business. Both you and I go out each and every week and we stock up. Kroger is the largest grocery store chain by both number of stores and sales. However, what has worked for their product managers in the past is starting to change. The arrival of Walmart and Amazon with their innovative online ordering and home delivery services is starting to change how people buy their groceries. The Kroger product managers are going to have to take a careful look at their product manager job description and make some changes if they want to survive.
Kroger has not had to make changes in the past because change has been slow to come to the world of grocery purchases. However, things are now changing and both young and old people are becoming more comfortable ordering groceries online. Kroger is starting to face a lot of new competitors. Walmart, Target, and Amazon are all getting into the business of allowing customer to order groceries online and then either visiting a store and picking the groceries up or having them sent to their home. The Kroger product managers have been struggling with the Kroger managers who have been slow to change. Kroger did buy a company called Vitacost.com; however, after the purchase they were slow to make use of Vitacost’s technology. The Kroger product managers have started to work with the large technology companies and they are also working with smaller firms to find ways to automate their operations. The Kroger product managers want to move into the future without leaving their existing customers behind.
The way that people purchase groceries is undergoing a dramatic change. The largest player in this market, Kroger, is struggling to keep up with the changes. The good news is that Kroger understands that change is happening. However, in the past they have been slow to adapt to the changes in their marketplace. The Kroger product managers seem to now understand what changes they need to make and are taking steps to implement them. If they can get the support of the Kroger store managers, then they have a real opportunity to create a grocery store powerhouse.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: Do you think that Kroger should start to focus on online grocery sales and less on selling groceries in their store?
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What We’ll Be Talking About Next Time
Welcome to the era of Google and Facebook. Product managers have had to learn to live in a world that is dominated by these firms. They control what the users of their applications see. Their algorithms determine what their users see in addition to all of the information that they are getting from friends and family. What product managers need is a better way to update their product development definition in order to get in contact with their potential customers. Should we start to use email once again?