online grocery sales grow

As online grocery sales grow, Amazon is poised to become the nation’s third-largest grocery retailer by 2021, a Cowen & Co. report finds.

The Kroger Co. says it added 420 locations to its online ordering service in 2016, bringing the total number of stores from which it fulfills online orders to more than 640. The retailer has 2,796 stores in 35 states in the U.S.

The grocery chain also is experimenting with delivery via ride-hailing service Uber, Kroger CEO Rodney McMullen said during Kroger’s recent conference call with analysts. “We’re testing with Uber delivery in several locations with plans to expand in 2017 where our customers can order through [Kroger’s online ordering service] ClickList and choose to have their groceries delivered by a local Uber driver,” McMullen said, according to a Seeking Alpha transcript.

Kroger’s commitment to digital is part of a long-term strategy, McMullen said during the conference call with analysts discussing Kroger’s fourth quarter and fiscal 2016 financial results. Kroger is No. 83 in the Internet Retailer 2016 Top 500 Guide. “We could stop all of these [e-commerce] investments given the headwinds our industry is facing. That might make our results look better today, but we are playing for the long term,” he said.

The retailer, which does not break out online sales, reported total sales of $27.6 billion for fiscal Q4 ended Jan. 28, up 5.3% from $26.2 billion for the same quarter a year earlier. For fiscal 2016, sales were $115.3 billion, up 5% from $109.8 billion in fiscal 2015.

Kroger’s commitment to e-commerce comes as U.S. online grocery sales are accelerating and becoming increasingly mainstream.