Kroger Launches New SNAP Discount Program | Fast Five Shorts

Kroger has launched a new discount program whereby people enrolled in SNAP, WIC, Medicaid or similar programs can get a 20% discount on produce and half off the cost of the grocer's Boost membership program.

According to a Kroger press release, customers can enroll in the program through Sheer id, an online verification service provider and verification is valid for five months.

Verified savings customers are also eligible for 50% off annual and monthly Boost membership plans, including boost essential at $34.50 per year or $4.50 per month and boost at $49.50 per year or $6.50 per month.

And little known fun fact, according to Grocery Dive, SNAP customers typically outspend their non SNAP shopper counterparts on groceries, a fact I was not aware of.

And what do you think the strategic rationale is behind Kroger's new discount program for SNAP recipients?

I actually think this is a really smart move from Kroger and something that they had to do because Aldi, Walmart, they were eating Kroger's lunch when it came to their share of grocery, especially discounted grocery and produce.

And so I think this means this looks to be a smart move for Kroger to attract a consistent customer base who I also didn't know apparently the SNAP recipients outspend their non SNAP counterparts.

So I think this is going to be a direct hit and at Aldi and at Walmart.

But the biggest challenges that I see in this and I think what Kroger will really have to invest in this is going to be a huge marketing push is to get awareness of this program out there.

It's a great deal.

There's the incentives are wonderful, 20% off produce and a very discounted delivery program.

Amazing opportunity for SNAP participants.

But getting people to switch their routines is difficult.

And so I think that they're really to have to push how they're getting out there and trying to get this groundswell people who are using SNAP benefits to understand this is the place to go.

Kroger and the Boost membership are very advantageous for you in a variety of ways.

And I think that that could be a pretty big hurdle to get over.

But there's the incentive is certainly there.

But Chris, what are your thoughts about it?

Would you have advised Kroger to do this if you were if you were in the boardroom?

So net you like it.

You like it a lot.

That's what I'm taking from this.

I think from from Kroger's perspective, yes, they, it was something that they had to do to try to gain share, especially with all the other things with Ocado, you know, that relationship sunsetting and all the other things that they have going on.

I think to, to really get gain share again in relevance with, with a customer base that's concerned about price, they have to do it.

Yeah, I, I actually, I, I 100% disagree.

I don't like this at all.

I think when you're in a position where you're having to compete on price, particularly at this demographic, a, it's not an advantageous position that I would want to be in if I'm Kroger.

And you know, for that reason I, I agree with you in some things you said.

I think this has Walmart and Aldi written all over it.

You know, I think it's like, it's kind of like we're in the boardroom, we're looking forward and we don't like what we see.

And it's potentially even a move of desperation because the aggressiveness, it's a very aggressive stance here that makes me think they're worried about losing share.

We know from Brick meets Click's report last year, last month that Walmart is gaining share online.

They're likely gaining share in store.

Bloomberg just did the big article on Aldi yesterday too.

So we know they're doing well.

And my hunches, Kroger looks out and doesn't like what it sees.

And so the other part I don't like about this and is once you do this for this base, a 20% discount, that's really hard to unwind and that's going to be in your annual numbers year over year over year.

And that's just going to be a continuing profit hit going forward.

So I don't know, it seems drastic to me.

I think, I think I applaud the compassion and what they're trying to do here in terms of the community that they're trying to help here by getting groceries that people need into their, into their homes less expensively.

But I worry for Kroger in the long run if this will play off and there wasn't a better way to accomplish something similar.

What would you advise them to do then to compete against Walmart and Aldi?

I don't know.

I mean, I think that's, that's, that's a great question.

Like you've got to look at, you know, you, you mentioned the Okada relationship.

They're trying to figure that out.

They've got to figure out the pro, the economics and profits of that.

But ultimately, at the end of the day, the real differentiation comes into the question we always ask on the store.

Why am I coming to a Kroger store to begin with?

Which is why I've actually always been kind of short on Kroger in the long run, because I don't see them differentiating themselves five to ten years out.

When you look at what Aldi can do, what Walmart can do and what some of the other competitors can do, and you have Amazon out there in the E commerce space, which we're going to talk about in the next couple of headlines, also doing what they're doing.

So it's kind of a tough, it's a tough question to answer.

I don't have the answer.

It's kind of how I feel about the department stores as well.

Like, it's just kind of a model that might be starting to lose its sway with the American consumer.

And that's what concerns me.

Yeah, that's, I mean, it's a, it's a good point.

I think there's a lot to be considered.

You're the point, I think that is most important, that I would be looking at as KRoger Is this 20% discount on the produce.

How do you figure out, like, I think right now it's only good for January or some, some shorter period of time, but I think how do you figure out to invest in keeping something like that available to these SNAP participants?

Because one month is not enough to carry this on.

Like, you, you have to take, you know, consider it like, is this a marketing expense?

Are we pulling from the marketing budget to compensate for this 20% off that we're to be giving people?

It requires a completely new way of thinking for Kroger to, to still stay relevant.

Which I think is, is a good point that you, you brought up there at the end.