But this reflects heightened competition in the grocery business, and grocers seem to be sacrifice margins to capture share of shoppers that are changing the way the buy groceries.
Walmart's plan is for $98 a year, and customers will have unlimited access to grocery items. It will be available in 1,400 stores, but management plans to extend the offering to 50% of U.S. by the end of 2019. The company also noted this will be infused with Walmart's online strategy, which includes mobile ordering for both pick-up and delivery.
Grocery businesses are racing to provide the fastest, most efficient service for shoppers, with these services often coming in the form of online offerings. Target's (TGT) - Get Report Shipt offers a subscription of $99 a year, which allows customers to order grocery items for delivery on the day of ordering. Amazon (AMZN) - Get Report Prime is $119 a year, but with perks and discounts at Whole Foods. The move to a steady revenue stream -- a subscription -- while servicing customers with as much food as they'd like is not exactly aimed at fattening profit margins, but rather taking market share, a trade-off companies are usually willing to make in the face of heightened competition.
Meanwhile, Kroger (KR) - Get Report reported earnings Thursday morning. The stock moved up initially, before falling 0.82% to $25.36, as news of Walmart's plan broke. Kroger has failed to compete effectively with the rest of the grocery business. While shares of Walmart and Costco (COST) - Get Report have risen in the past five years, Kroger shares have fallen 1.3% in that span.
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