Flexible Inflexibility
Flexibility and real options would seem to be the enemy of Kroger. As a behemoth of a company, creating flexible lanes and channels would more likely than not prove to create chaos and not generate the expected positive outcomes. There appears to be little uncertainty in the world of grocers: customers will, under normal circumstances, will always need to purchase food goods and supply chains tend to be fairly stable. If uncertainty presents in the supply chain, grocers would seek to eliminate any uncertainty and seek the option to lock in optimal conditions. So, inherently, if “flexibility is valuable under conditions of high uncertainty” then flexibility wouldn’t need to be employed by Kroger (Barney, 225).
Customers depend on Kroger to remain rigid to a certain degree - they may expect some variety but it does not come close to creating flexibility within the market itself. Flexibility in the form of changes to the goods offered may create confusion for consumers and reduce their loyalty if there cannot be some semblance of normalcy (Barney, 224).
Fascinatingly, COVID-19 has presented uncertainty for both Kroger and the consumer. Unexpected changes in the supply chain created a chance and need for Kroger to explore flexible options but without the infrastructure to be nimble, Kroger was unable to pivot quick enough. Stores were depleted of certain items and remained with continued low inventory for multiple weeks (CNBC). Interestingly, Kroger passed the onus of flexibility onto the customer in terms of their purchasing choices (CNBC). This is a fascinating tact as it has the potential to seriously backfire - if a consumer is continuously faced with out of stocks with their preferred vendor, they may choose to switch their loyalty and shop somewhere else. However, this is an unique situation with COVID-19 since so many of the same vendors and suppliers were negatively affected and the same problems presented in other grocery stores. It will be interesting to evaluate the data of shopping preferences and loyalty after COVID-19 and try to learn if the inflexibility of Kroger had any adverse effect.
It seems unlikely that Kroger will choose to incorporate aspects of flexibility into their pricing, stocking, or front-facing consumer options but there is a real opportunity for them to evaluate other flexibility options. Due to the pandemic they may see a need for certain distributors or manufacturing plants to be able to pivot and adjust production as needed. They may also do analysis that suggests a need for diversification in order not to face the same shortages. Consumers (for grocery stores) tend to be typical and predictable but there is always an opportunity for a surprise or uncertain situation to arise. Flexibility seems to be unlikely in the future for Kroger but they may find the need arise when other, more nimble competitors create paradigm shifts.
Sources:
- Barney, Jay B. Gaining and Sustaining Competitive Advantage. Pearson Education (US), 2011. [VitalSource Bookshelf]
- https://www.cnbc.com/2020/05/06/kroger-ceo-customers-will-have-meat-during-pandemic-if-they-are-flexible.html