July 26, 2019
The Kroger Company is in the process of building 20 automated warehouses around the U.S. in partnership with the U.K.’s leading online grocer, Ocado Group Plc. The British retailer’s focus since its beginning was creating a digital grocery shopping platform, complete with a tech-enabled warehouse and logistics system.
Ocado’s newest online grocery fulfillment center near London features 1,000 robots that traverse on a grid at 13 feet per second, and can pick up and transport bins of groceries. Not only is it cost-efficient, due to reduced labor costs, the system is time-efficient too. Workers can now pack roughly 600 items per hour, which Ocado’s estimates translates to one hour of labor savings for every 50-item order.
But, perhaps most compelling about Ocado’s system is the fact that all aspects of the fulfillment process are designed to accommodate grocery shopping’s unique quirks. The system can cue workers to place items in a single grocery bag at a specific time for any given order. That’s key when packing groceries because assembling orders involves a wide range of lighter weight and heavier goods, including packaged items, fresh produce, as well as chilled and frozen food.
Colliers International’s Anjee Solanki says “The American supermarket giant is counting on the combined expertise with its British partner to help it outdo rivals ranging from Amazon.com to Walmart.”
Kroger’s digital shopping strategy follows two related moves by the company, including the $200-million acquisition of Home Chef, a meal-kit company, and the disposition of its convenience store business unit to EG Group for $2.15 billion.
The U.S. grocer is counting on this acute specialization and partnership with Ocado to help it solve the challenges of online grocery shopping. The British company has already found success. Ocado reported its sales increased 12% last year to $2 billion (USD), and its active customer count increased 11% from the previous year.
Kroger plans to invest $55 million to build the first of the Ocado-powered fulfillment centers in the Cincinnati region.
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