Report: Target and Kroger Considering a Merger
According to a new report, two of the biggest names in food retailing, Target and Kroger, are considering a merger that would bolster their position against the growing threat of Amazon.com. Fast Company reported Friday morning that Target and Kroger started talking "last summer" about "a partnership" that would help Target's grocery business and Kroger's e-commerce capabilities. The article goes on to say that these talks continued into the fall and are "ongoing" this year. However, CNBC and Reuters both reported that an unnamed source said there was "no truth" to the merger rumor.
Total Retail's Take: Amazon's acquisition of Whole Foods last year sent the entire grocery industry into a state of upheaval. The entrance of the online retail leader into the marketplace left grocers scrambling for ways to fortify their businesses and protect themselves from the growing threat of Amazon owning another vertical. In addition, more and more consumers are choosing to shop for groceries online, and traditional grocery chains, such as Kroger, recognize that their businesses need to evolve digitally in order to compete in a marketplace that includes Amazon. A partnership with Target — and its growing grocery delivery business post Shipt acquisition — would accomplish that. At this point it seems a Target-Kroger merger is purely speculation, but that could change. Just think, who would have thought 12 months ago that Amazon would buy Whole Foods? Change is the new normal in grocery.