Kroger Is Suddenly Whole Foods' Biggest Threat

Kroger is thriving in a difficult market for grocery stores.

The supermarket chain is expected to surpass Whole Foods Market within two years and become the nation's top seller of organic and natural food, according to a recent report by JPMorgan.

Kroger's strategy of offering more specialty and organic food is helping it overtake other chains despite an industry-wide trend away from supermarkets, JPMorgan analysts write.

Traditional supermarkets have been losing market share to high-end grocers, warehouse chains, and dollar stores because customers are seeking either specialty assortments or great value, according to a recent report by the real estate investment firm JLL.

"Millennials and Boomers alike are focusing more on healthy eating choices and creatively prepared meals," the analysts write.

Selling more organic food will attract high-end customers and help drive profits at Kroger, according to JPMorgan.

Kroger, which has more than 2,000 locations, could also take potential customers from Whole Foods.

Whole Foods has 287 locations but continues to expand into new markets.

In addition to offering more organic food, Kroger is expanding into affluent markets in Baltimore and Washington DC.