Kroger's planned purchase of Vitacost means natural market expansion

On Wednesday, Kroger announced plans to purchase online grocery and nutrition products retailer Vitacost.com in a $280 million deal that would cement Kroger's online hold and potentially develop a home delivery platform.

Rodney McMullen, chief executive of Kroger, said in a Wall Street Journal interview that the grocery chain plans to add some of its own natural and organic foods, sold under the Simple Truth brand, to Vitacost's website, which currently offers more than 45,000 products to about 2.3 million active customers. Kroger expects Simple Truth, which includes products from oatmeal to fresh ground beef, will hit $1 billion in sales this year.

Acquisition of technology and service capabilities is not new for Kroger. Its recent Harris Teeter acquisition included access to click-to-collect technology.

According to the Wall Street Journal, "Kroger says that model has more potential for growth in fresh food sales. Kroger also is testing home delivery with its King Soopers stores in Denver, but that business isn't producing the kind of results that make it scalable to other stores yet, the company said."

"We are delighted to welcome Vitacost.com to the Kroger family," Rodney McMullen, Kroger's chief executive officer, said via Kroger corporate press release.  "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 pick up 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 eCommerce platform by integrating it with our existing digital offerings to create exciting new levels of personalization and convenience for our customers."

Both Kroger and Vitacost have made major private label pushes in the last couple of years to expand natural and organic foods and offer value to health and wellness shoppers.