Supermarket giant Kroger Co. wants to beef up its Internet operations.
The operator of Ralphs and Food 4 Less said Wednesday that it is buying Vitacost.com, an online seller of vitamins and other health-oriented products, for $280 million. Kroger said the acquisition would open up opportunities to sell its products online and compete with companies like Amazon.com and Wal-Mart.
"The deal could be transformative for Kroger," said Burt Flickinger III, managing director at retail consulting firm Strategic Resource Group in New York. "It gives them the chance to meet and exceed the scale of competitors like PeaPod, Safeway and ShopRite and be the national leader in online delivery."
Kroger's online retail options are now limited to King Scoopers in Denver and 154 Harris Teeter stores, primarily in the Southeast. Its Denver model has been a small-scale work in progress that would not work nationwide, the company said.
Last year Kroger bought Harris Teeter for $2.44 billion, adding Teeter's "click and collect" online service that enables customers at some stores to order groceries online and pick them up at the store.
Buying Vitacost gives Kroger a ready-made online shopping platform that can be adapted and expanded over the next few years.
"Vitacost accelerates us into the e-commerce space immediately," said Keith Dailey, the company's director of media relations.
Buying Vitacost "puts us years ahead of where we were to provide an easy delivery service," Dailey said. The technology "will let us test out ways to sell fresh food online and deliver it in a way that's economical."
Kroger is paying $8 a share in cash for Vitacost, a 27% premium to its Tuesday closing price of $6.28.