Given that Kroger has owned Fred Meyer since 1999, private label apparel is hardly a stretch. That being said, what was a quantum change from Walmart's acquisition of Jet was that it was in large part an acquisition of talent, maybe a brand, but more importantly a different way for conceptualizing online commerce from how Walmart had been doing it. Now the momentum for the company seems to be changing as it relates to e-commerce.
Kroger needs to do the same thing, at least as it relates to the e-commerce end of the business. Do they have the capability to create cross banner brands and ways of doing business? Sure they do. But as I said before, it appears that they have lots of "stranded best practice," that outside of creating decent superstores and adding nonfood categories to stores with the Marketplace format, they don't seem to be doing transformational change. Can Boxed be the answer? Probably not, but stock analysts will be happy.
I have thought for awhile that BBB has a real opportunity, like Walgreens/Duane Read with their "flagship" stores in major cities, to develop an equivalent of the failed Home Depot Expo Design centers, but better fitted to the BBB merchandise set, to better position their home goods, even do some furniture, along with their great values on other stuff, plus the World Market food sections now in some of their stores. In fact, it could be a combo of the World Market format and Bed Bath and Beyond, but a little roomier, but a limited number of locations in each submarket. The advantage of food and HBC items is that they are purchased frequently, increasing store visits, which can be leveraged to sell people other stuff.
Another example, albeit failed, was how Sears tried to marry Sears + Kmart in their "Sears Grand" experiment. The SG format could have worked, had the company different leadership.
The other way to think about it is that the BBB catalogs are small but very nice, and communicate an image and brand promise that is completely different from what you experience once you walk in a store.
Really the issue is new construction. By definition, new construction, based on current costs for land, labor, and materials is the highest price, regardless of where it is constructed. Maybe you don't have a lot of this product in the city of Atlanta, but it's present in cities like DC, Boston, West Los Angeles, Seattle, etc.
The other problem is that regional and national real estate developers generally aren't very good at dealing with independent retailers. Some are developing the skill set (e.g., how Edens has done developments in DC, Northern Virginia, and elsewhere). But most aren't. Neither are traditional real estate development financing systems, which are focused on "credit tenants," that is "chains," although franchises (e.g., Ace Hardware, Dunkin Donuts, etc.) work within that kind of regime.
The problem with this discussion is it's merely a reformulation of the once dominant mall as a retail real estate product. The average resident supports 7.5 s.f. of retail space. The building featured in the WSJ article has 250,000 s.f. of retail and the complex will have 700 households. At a minimum more than 30,000 residents are required to support it. (Note that the figures I use need to be revised downward to account for the impact of e-commerce, so now maybe the average household supports 5 s.f. of retail brick and mortar space.)
Obviously, to support that amount of retail space, the site has to draw on the surrounding retail trade area. What makes the new building product any different from all the other retail developments -- malls, strip shopping centers, neighborhood centers, town centers -- likely already present in the RTA?
What's more "interesting" is that it says that the mall as a standalone real estate product is past its prime and that new, or more accurately different, retail real estate products are being developed to replace it.
The Chicago supermarket chain Mariano's is owned by Kroger. I can't shop in a "Kroger" either living in DC, but I can and do shop in Harris-Teeter which is owned by them (I don't think they've unified the loyalty card system of H-T with Kroger generally though).
_Hardware Retailing_ magazine regularly features stories about grocery-hardware combinations. They tend to be in small and rural communities. Maybe you should subscribe! (I get it, because I used to be on the board of a building materials reuse nonprofit.)
Previous discussion of Kroger on this site has made me realize that they have tons of what we might call "stranded best practices," lots of great individual best practices examples that aren't harvested and improved at the corporate level and then spread out through the company's divisions in a systematic way, with the exception of the Marketplace format/Fred Meyer. (E.g., compare their independent convenience stores to Wawa or Sheetz or the GetGo division of Giant Eagle.)
However, increasingly supermarkets probably are going to need to focus on strengthening their "convenience" bona fides and adding other convenience goods and services to increase store visits, average purchase, etc. (E.g., why not have a dry cleaner drop off or a post office, just like some banks have branches, pharmacies, etc.)
Kroger could develop a renewed Marketplace format with a focused hardware assortment --especially with the falloff in the success of Sears, and it probably makes sense. However, it would likely put them in competition with existing Ace stores if they were to begin to systematically roll out such a format in conjunction with Ace.
Note that I think besides profit, the primary reason that Kroger developed the Marketplace format is to forestall, or to push farther away, Walmart or Target from their stores. Adding hardware could be a way to further develop this format and box out Walmart and Target, especially in urban markets.
This is speculative, designed to stoke the market. Although Amazon's thinking has proved me wrong a bunch of times. The Whole Foods acquisition only makes sense as being focused on supporting and extending their "platform" or "product service system" developed around Amazon Prime. Whole Foods makes perfect sense because the demographics of their customer base and the location footprint of their stores likely dovetails very strongly with the Amazon Prime customer base. There is no way that this is true of the Target store footprint or demographics/customer base. Therefore it seems highly speculative, like a stretch and like a dilution of revenues to pursue Target. But again, I am not great at predicting what Amazon will do.
The short answer is, it depends.
Likely the combination will have some effect on slackening price increases in some elements in healthcare. But it won't have all that much effect because the issue is how the system for providing healthcare and wellness services is focused on "insurance," and providing care "reactively" that is, in response to problems, as opposed to working with people to manage optimal health, including working at behavior changes so that people will adopt as routine behaviors that support health rather than illness, especially concerning chronic health problems and health problems that derive from unsound choices.
Not having any prescriptions myself, I am not always up on the latest in drug store marketing and systems. When this announcement was made, I thought to check in on grocery store delivery and whether or not the chains that have drug stores include prescriptions in their delivery schemes. I only checked Safeway's website, but they do include prescriptions in their delivery program. Obviously that's something that supermarkets need to better market.
Decades ago I worked for the Center for Science in the Public Interest, a health advocacy group. I left after having lost a battle about direction. I ran into some of the people a couple years later, and we argued about the failure of the Dr. Koop health video series in the early to mid 1990s. They were sold at CVS I think. The guy who beat me out said they failed because "the videos were too much Koop." I disagreed. I said "no one goes to a pharmacy like CVS for 'health services,' they just go to buy stuff." Well, CVS is changing this reality, they have the potential to reposition as "health stores." This possible hook up with Aetna allows them to redirect and reconfigure the "product-service system" in a variety of ways that could be quite innovative.