WCPO News has a piece about why Kroger is ready to go to the mattresses to complete its $24.6 billion acquisition of Albertsons.
It has less to do with growing grocery market share, the reasoning goes, and more to do with growing a retail media empire.
“Long term, the biggest accelerator for profit growth for Kroger is not grocery. It’s actually retail media and advertising,” Dean Rosenblum, senior research analyst for AllianceBernstein, tells WCPO. “And this deal takes Kroger from 40% reach of population in the U.S. to 70%. It solidifies them as the heir apparent to this pretty huge revenue stream that will accrue to the grocers, once somebody figures out how to execute it.”
Th story goes on:
"Kroger has been talking since 2018 about the potential for using its data-analytics capabilities to help consumer-product companies target the shoppers most likely to buy their products. Those capabilities generated a $1.2 billion in operating profit for the company in 2022, CEO Rodney McMullen told shareholders in March."
McMullen said: “Kroger Precision Marketing is one of our fastest-growing businesses and is well-positioned to win within the U.S. retail media landscape, which is projected to be a $55 billion industry by 2024. What makes our retail media business special is our ability to help brands achieve a greater return on their media investment."
- KC's View:
Funny to think that for retailers of a certain size, groceries could end up being a loss-leader, with an ancillary business actually providing the fuel that drives competition.
Wait a minute. Isn't that sort of what Amazon Web Services has done for Amazon?