Kroger says it will transform grocery e-commerce with ‘first of its kind’ fulfillment tech
Forget about underselling and overperforming. Kroger is going all in with the launch of its first automated fulfillment center (AKA shed) as part of its deal with Ocado, the British grocery e-commerce leader.
Kroger, the largest supermarket chain operator in the U.S., said the new facility “transforms grocery e-commerce” by bringing together “vertical integration, machine learning and robotics” to provide fast and affordable deliveries to customers.
The new 375,00-square-foot shed, located in Monroe, OH, just north of Kroger’s Cincinnati headquarters, will operate with around 1,000 robots working along with 400 of the retailer’s associates to pick, sort and ship orders to customers. The robots “whizz around giant 3D grids, orchestrated by proprietary air-traffic control systems in the unlicensed spectrum. The grid, known as The Hive, contains totes with products and ready-to-deliver customer orders,” according to a company release.
Each of the facilities is expected to process as much as $700 million in orders on an annual basis and to do so more efficiently and at a lower cost than current methods. Kroger has said that each shed will enable it to cover up to 90 miles from its site and that its reach will extend to “significantly more territory when spoke locations are integrated.”
Kroger and Ocado signed a deal in 2018 to build as many as 20 of automated sheds in response to what, at the time, was a small but growing percentage of Americans ordering groceries online. The novel coronavirus pandemic hit the U.S. in the meantime, accelerating consumer usage of online grocery shopping. Kroger responded by expanding store-based fulfillment. The U.S. grocery giant currently makes deliveries from 2,472 stores and offers pickup at 2,223. Ninety-eight percent of all Kroger households are now covered by these services.
Ocado co-founder and CEO Tim Steiner said that his company and Kroger will open more sheds of various sizes across the country.
“We will also roll out components of our software solutions to stores in collaboration with Kroger’s existing seamless platform to support fulfillment of curbside pickup orders,” he said in a statement. “The breadth of this fulfillment ecosystem will be crucial in helping Kroger to continue to win in e-commerce across the U.S.”
- Kroger Delivery Introduces America’s First Customer Fulfillment Center – The Kroger Co.
- Ocado to automate Kroger warehouses in exclusive U.S. deal – RetailWire
- Is there a secret sauce to Kroger’s online success? – RetailWire
DISCUSSION QUESTIONS: Do you expect the Kroger/Ocado partnership to transform e-grocery in the U.S.? Do you expect Kroger’s rivals, particularly large retailers, to develop similar grocery delivery distribution systems or to go in other directions?