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In a move supporting its goal of expanding into new channels and markets –- as well as giving its customers more paths of digital engagement -- Kroger has acquired Boca Raton, Fla.-based online healthy-living products retailer Vitacost.com, Inc., one of the largest pure e-commerce companies in the nutrition and healthy-living market.
"We are delighted to welcome Vitacost.com to the Kroger family," said Rodney McMullen, Kroger's CEO. "Vitacost.com's talented team has built an exceptional online retail destination in the growing nutrition and wellness market, with an enviable technology and fulfillment infrastructure. This merger is in line with our growth strategy to enter new markets and new channels, and –- along with Harris Teeter's online order and pickup service –- accelerates our efforts to provide customers with even more ways to shop. Vitacost.com's core focus on healthy-living products is complementary to our fast-growing natural foods business, and we intend to grow Vitacost.com's strong position in the online nutrition market. At the same time, we will build on Vitacost.com's e-commerce platform by integrating it with our existing digital offerings to create exciting new levels of personalization and convenience for our customers."
Vitacost brings to the table a team with extensive e-commerce experience, and a substantial platform that includes technology and ship-to-home fulfillment centers to serve customers in all 50 states and internationally. It offers more than 45,000 products, including vitamins, minerals, herbs, supplements, sports nutrition, beauty care items, and natural and organic foods to about 2.3 million active customers. The company has more than 800 associates and operates distribution centers in Lexington, N.C., and Las Vegas, and a customer service center in Lexington.
"We are excited to join such a tremendous organization and believe this will be an outstanding partnership," noted Jeffrey Horowitz, CEO of Vitacost.com. "The company will benefit by leveraging Kroger's scale and resources to further drive the online healthy-living industry to new heights."
On the technology side, Vitacost.com’s e-commerce platform will enable Kroger to serve customers through ship-to-home orders in all 50 states, including 16 states currently not served by Kroger supermarkets, expanding the grocer's reach into new U.S. markets as well as internationally. Vitacost.com's website and mobile app offer robust product information; rich content including recipes, videos and customer reviews; and "Set & Save" subscriptions for thousands of items.
“This acquisition hits a couple of sweet spots for Kroger,” Bill Bishop, chief architect of Barrington, Ill.-based omni-channel retailer consultancy Brick Meets Click, told Progrressive Grocer. “Vitacost is well developed in e-commerce, which is something that everyone is still trying to figure out. It is also well positioned in one of the grocery areas –- healthy options –- that is growing rapidly. This is important for them competitively, as they seek to continue to look for growth in spaces in which Walmart is not distinctively strong. "
Building on Vitacost.com's technology and fulfillment platform and linking it to Kroger's existing digital capabilities will accelerate Kroger's omnichannel strategy. Millions of customers already plan their shopping online using Kroger's cloud-based shopping list and weekly ad through the company's mobile apps and Kroger.com, and more than 1 billion digital coupons have been downloaded since 2009. Kroger offers an order-online, deliver-to-home service in its Denver-based King Soopers division, and continues to learn from Harris Teeter's successful Express Lane model, which offers customers the ability to order online and pick up at their local store in 154 locations. With Vitacost.com, Kroger will offer customers the convenience to order online and ship to their doors with an expanded assortment online.
“The arms race in e-commerce for user experience is heating up,” added Bishop. "Kroger is definitely pushing the envelope in state-of-the-art as far as user experience is concerned.”
After the deal closes, Vitacost.com will operate as a subsidiary of Kroger and continue to operate its facilities in Boca Raton, Lexington and Las Vegas.