Stores? Kroger don’t need no stinking stores
Kroger may not have found the treasure of the Sierra Madre, but the grocery giant appears to have struck grocery retailing gold with its use of automated warehouses, spoke hubs and micro-fulfillment centers to move into markets without having to open stores.
The nation’s largest supermarket operator announced yesterday that it plans to expand Kroger Delivery, including into markets where it currently has no physical store presence (Northeast U.S.) and expand in another (Florida) where it first began its digital-only push earlier this year.
Kroger entered the Central Florida market and discovered that consumer demand and its technological prowess using Ocado’s automated fulfillment tools enabled it to expand more rapidly than originally anticipated. The retailer claims high levels of repeat orders and net promoter scores from customers.
The company opened its first large fulfillment shed in Groveland and has since added “spoke” sites in Jacksonville and Tampa. Two smaller fulfillment centers will be added in South Florida enabling Kroger to serve customers in as little as 30 minutes from a selection of 10,000 food products and non-food essentials and deliver same- or next-day orders to customers choosing from over 35,000 items.
“The acceleration of Kroger Delivery continues with these new facilities and our continued focus on creating career opportunities and serving customers through interconnected, automated and innovative fulfillment models that cater to different and accretive grocery shopper missions in both new and existing geographies,” said Gabriel Arreaga, Kroger’s senior vice president and chief supply chain officer. “We have a pipeline of sites in development across the U.S., with several scheduled to open next year, and we’re excited to continue delivering the Kroger experience to more doorsteps.”
Kroger said it will enter the Northeast for the first time, offering same-day and next-day grocery delivery. The retailer is scheduled to open one of its Ocado facilities in Frederick, MD, next year.
Each of the sheds is expected to handle up to $700 million in orders annually and to operate more efficiently and cheaply than present methods. Kroger is extending the reach of the sheds, which are designed to cover up to 90 miles, with the addition of spoke locations, as in Florida.
- Kroger Delivery Expands with New Fulfillment Centers – The Kroger Co.
- Kroger says it will transform grocery e-commerce with ‘first of its kind’ fulfillment tech – RetailWire
DISCUSSION QUESTIONS: What is your takeaway from Kroger’s rollout of the Ocado system in Florida and elsewhere? How will this affect what other retailers are doing in the online grocery space?