Ever since I met my wife, over 40 years ago, I have had to be the cook. She can live on maybe a half-dozen recipes. I need variety. Besides, I like to cook. (Pizza is cheap and easy to customize, just invest in a good mixer and an oven that can get as hot as possible)
Cooking means buying groceries. It means keeping the pantry full, and sorted. Sometimes you're buying staples, sometimes a few extra things for today or tomorrow. But it's a chore, and despite decades of experience, shopping is a chore I'm still not great at.
So the next big thing for retail is automating all this. If grocery lists can be automated, and if I can get just what I need when I need it, maybe I won't have so much food going to waste. Whoever can do this for me will get my loyalty in a way no one has since Costco (NASDAQ:COST) showed I could stock up on toilet paper once a month.
There are two ways this can be attacked. You can attack it from the list, or you can attack it from the dinner.
- If you're attacking from the list, you want someone to store staples in an app, or online, and check them off when they get low. From a technology standpoint, it should be an easy hack.
- If you're attacking from dinner, you want to store recipes, and alert the cook to what is missing before the cooking starts.
A recent Top 10 list on shopping lists included apps from only two retailers, Kroger (NYSE:KR) and privately-held Meijer. But there are a number of interesting products here - Our Groceries, Bring! and Listonic's Smart Shopping List among them, which could make a nice bolt-on for a Kroger competitor (like Whole Foods (NASDAQ:WFM) or Wal-Mart (NYSE:WMT).
Another way forward is to start from the recipe side. There are apps for that, like ChefTap. But the way to make money with these apps is to integrate them with grocery purchases. Companies like Plated, Blue Apron, and Hello Fresh can be great ways to cook (especially for beginners), but when you find yourself paying $40 for $10 worth of groceries, it's an easy habit to end.
Please note this, Amazon.com (NASDAQ:AMZN) and The New York Times (NYSE:NYT) - you need both cheap infrastructure and value to make this work. It's still about breaking bulk profitably. Amazon is reportedly working alongside Tyson Foods (NYSE:TSN). The Times is limiting its exposure by working with Chef'D.
Of all these companies, the one closest to being a pure play in the public market is venture capital-backed Thrive Market which combines the paid membership model of Costco with the health consciousness of Whole Foods. I see a lot of press releases claiming this area is thriving, but until I see some profits, it's a bubble, a speculation, for the investor.
If I had to recommend one company that can get the balance right, and that is trying to get the balance right, it would have to be Kroger. It has more irons in the fire, it does pick-up as well as delivery, it has a decent shopping app, it has an extensive network of reasonably-sized stores to work with, a nationwide footprint, and it's not getting out ahead of itself, wasting money on long-shot bets.
For now, Kroger is the bet.
Disclosure: I am/we are long COST, AMZN, KR.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.