The new service, which is being piloted in the Atlanta, Cincinnati, Columbus, OH, and Indianapolis markets, comes in two price tiers. Customers paying $59 a year get free delivery within 24 hours and two-times Kroger fuel points up to $1 off the price of a gallon of gas. Those paying $99 get free delivery in as little as two hours and fuel rewards. Free delivery is offered on orders of $35 or more
Kroger sends customers who sign up for Boost “a welcome kit” valued at over $100, according to WLTW. It includes deals from Home Chef, Murray’s Cheese, Vitacost and Kroger’s Our Brands in an offset to the membership fee.
“What was spurred by the pandemic has become a convenient habit for many consumers,” wrote David Naumann, marketing strategy lead – retail, travel and distribution at Verizon
Some other experts on the RetailWire BrainTrust agreed.
“This is keeping up with the Joneses and it’s a smart idea,” wrote Richard Hernandez, director at Main Street Markets. “They offer differentiators that are relevant to their customer base, such as points on gas fill ups. I expect to see more retailers jump into the ‘plus’ subscription model.”
“This is exactly what Kroger should be doing and the benefits of bringing subscription into a delivery model will not only ‘boost’ recurring revenues but will also increase Kroger’s brand power and loyalty,” wrote Liza Amlani, principal at Retail Strategy Group. “Keeping delivery in-house as opposed to using a third-party like Instacart will drive purchasing insights through customer data and preferences but will also encourage customers to choose Kroger vs. competitors because they have already paid for a year membership.”
Kroger is counting on the fuel rewards to be a significant draw for Boost since prices at the pump have jumped.
“It’s the perfect time to launch with double fuel points,” Stuart Aitken, Kroger’s chief merchant and marketing officer, told The Enquirer in Cincinnati. “If you go to the gas station right now, it’s more than it’s been in a long time, so it’s a great deal for customers.”
“Kroger customers will welcome this subscription for its convenience and compassion as the cost of living rises,” wrote Lisa Goller, content marketing strategist, on RetailWire. “As everyday expenses like food and gas increase, Kroger Boost makes these essentials more affordable. Fast grocery delivery is also essential for Kroger to counter grocers, food apps and last-mile players speeding up CPG.”
The retail giant is also looking to boost sales (pun intended) via digital channels, having set a goal of doubling its $10 billion in online revenues by 2023.
However, BrainTrust members like Neil Saunders, managing director at GlobalData, saw the launch of a subscription service as potentially bumping up against marketplace saturation.
“I wonder how attractive it is for those who only shop occasionally,” wrote Mr. Saunders. “There are so many paid-for subscription programs and schemes now and there are limits to the number customers will participate in.”
Others were skeptical about how far the draw of the offering could go.
“If the customers are already aligned with the Prime and Walmart subscription offerings and only are occasional shoppers at Kroger, they are not the target consumers,” wrote Brandon Rael, strategy and operations delivery leader. “While ‘free delivery’ and cost savings on gas will attract consumers’ attention, they are not the innovative offerings that will reimagine what the grocery shopping experiences could be.”