Kroger’s $18 billion e-commerce business can grow to 30 percent of the company’s business in the long term, Nate Faust, EVP and chief e-commerce officer, said at the company’s 2026 Investor Update, outlining a plan to be “fresh, fast and personal” for the grocer’s digital customers.
“We have an immense opportunity in front of us to become America’s favorite digital grocer. That’s a big part of what brought me to Kroger,” said Faust, who noted he had been with the company about six weeks. “We will win in fresh online. Whether customers shop in our stores or have their groceries delivered to their door, it is critical they get the same great fresh experience. Because whoever wins in fresh will win more customers over the long run.”
The one-in-seven opportunity
The near-term opportunity sits with existing shoppers: only one in seven Kroger store customers shops online with the company. “Many of these customers are already shopping for their groceries online, just not with Kroger,” Faust said. “Winning a greater share of our existing customers’ online baskets is an easier, faster and more efficient way to grow than acquiring new customers.”
The friction is measurable. Only about 40 percent of customers who begin signing up to shop Kroger online complete the process, and Faust said he recently timed a sign-up at one banner at close to four minutes. “These customers are already coming to us. We will make it easier for them,” he said.
Kroger is organizing small, cross-functional teams around each step of the customer journey, using customer feedback and performance measures to remove friction, and Faust said he stays connected to pain points by regularly listening to live customer service calls alongside agents. The company also plans to make it easier for shoppers to join its Boost membership and give members more reasons to order.
Speed and AI
On delivery speed, 60 percent of Kroger’s store-based delivery orders arrived in under two hours in the second quarter, including 23 percent in under one hour, and express delivery grew more than 50 percent in the quarter. “Customer expectations on speed of delivery continue to increase every year, every month, every day,” Faust said. “We already have the most important asset to deliver with speed, and that is our 2,700 stores.”
Kroger is exploring automated picking in stores to fulfill orders faster at lower cost, expanding pickup slots where demand is constrained, pursuing capital-efficient express delivery models, and, if more capacity is needed, “we will add more stores.”
The company’s AI-powered Kroger shopping assistant is now available in 100 percent of its banners and can help a family plan dinner based on preferences, dietary needs and budget. Repeat users spend 11 percent more, driven by more frequent trips. “Beyond the what and when, we will understand the why, whether that be feeding your family or leading a healthier lifestyle,” Faust said. Kroger expects an additional $500 million of e-commerce EBITDA by 2029, excluding media, as order density grows throughout the store network.
Retail media
Kroger Precision Marketing grows as first-party relationships grow, Faust said, with approximately 95 percent of sales tied to identified loyalty shoppers. That lets Kroger offer brands verified audiences rather than approximations: “We help brands identify and reach verified lapsed buyers with relevant advertising. Other platforms often rely on look-alike audiences to approximate those customers. We use our data. We then measure what happens next.” Advertisers rank Kroger first for accurate and transparent reporting and second for audience targeting and data sharing, he said.
The retail media priorities are growing first-party e-commerce, broadening brand reach with a larger sales team and deeper collaboration with merchandising, and leveraging the connected store, expanding in-store media and, looking ahead, reaching opted-in customers on their phones in the aisle. “We are working towards a future that’s fresh, fast and personal, wherever and however our customers choose to shop,” Faust said.
In the next installment: CFO David Kennerley details plan to save billions