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Following last month's announcement that it would be testing driverless ecommerce deliveries, Kroger has launched the first pilot at a store in Scottsdale, Arizona.

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Kroger has released its 2018 Sustainability Report, evaluating progress made towards its 2020 goals.

Ambitious 2020 goals

Kroger previously committed to three sustainable supply chain goals by 2020, and provided updates on each:

Increase responsible sourcing

  • In 2017, 87% of Kroger’s wild-caught fresh and frozen seafood was from either Marine Stewardship Council-certified, Fishery Improvement Projects or other Global Sustainable Seafood Initiative-recognised programmes. Goal: 100% by 2020
  • 21% of eggs sold in-store were cage free. Goal: 100% by 2025

Grow eco-stewardship

  • In 2017, Kroger diverted 77% of waste generated from landfill. Goal: 20%+ by 2020
  • Kroger recycled 66.15 million pounds of plastic in its operations in 2017, with a total of 134.48 million since the 2016 goal baseline. Goal: 200m pounds more by 2020 (2016 baseline)

Reduce carbon emissions

  • Kroger has achieved an 8.1% improvement in Ton Miles Per Gallon since 2010, up from 7.5% in 2016. Goal: improve by 20% by 2020 (2010 baseline)

Zero Hunger, Zero Waste goals

Last year, the retailer also released its Zero Hunger, Zero Waste plan, which includes:

  • Advocating policy solutions to address hunger and divert food waste from landfills
  • Achieving existing Zero Waste goals by 2020
  • Completely eliminating food waste by 2025

Making “incredible progress” on sustainability journey

Rodney McMullen, Kroger's chairman and CEO, commented: "Kroger associates achieved incredible progress on our business strategy and sustainability journey in 2017. We launched our three-year Restock Kroger plan, engaged more deeply with our Purpose: To Feed the Human Spirit, made progress on our 2020 Sustainability Goals, and introduced Kroger's ambitious Zero Hunger | Zero Waste social impact plan. These are all profoundly important to who we are and what we stand for as a company."

To increase the convenience of grocery home delivery, Kroger will be piloting autonomous delivery vehicles.

Partnership with Nuro

Kroger will partner with Nuro, a company that makes fully unmanned vehicles, to trial the delivery initiative. Customers will be able to place orders for same day delivery, through ClickList or through a Nuro app. The first trial is expected to happen later this year, but the pilot market has not yet been announced. The fully electric vehicles have locking compartments and shoppers will receive a code to unlock it when they place their order.

The small vehicles weigh around 1,500 pounds and have cameras and sensors to allow them to drive autonomously. It aims to increase the flexibility and responsiveness of the online grocery delivery process, making it more accessible and affordable for customers. Last mile delivery is often the highest area of cost in online services; improving cost efficiencies in this area could provide significant operational savings for Kroger, helping it to increase its competitiveness in the online channel.

Source: Kroger

Local ecommerce

Operating over 2,800 stores across 35 states creates a challenge for Kroger when designing home delivery solutions. This innovative partnership looks to help address this, creating a solution which would be relatively easy to roll out to multiple areas. Its Restock Kroger plan is focused on redefining the grocery experience for customers and increasing the ease of omni-channel shopping is one of the key ways in which it is striving to achieve this.

It also follows on from Kroger's recent announcement that it would partner with UK online grocery specialist, Ocado, where it will be able to access Ocado's technology, including robotics. Building its capabilities in a number of areas should help Kroger to address its aim of providing a seamless shopping experience for customers. 

New digital headquarters

Kroger has also announced that it will open a new digital HQ in Cincinnati, as it continues to expand its online operations. It wants to grow the office to 1,000 employees over the next three years, with some jobs initially moving from its current offices to the new HQ from July. This latest move is another indication of the commitment that Kroger has to increasing its digital focus and capabilities. With Q1 digital sales up 66% and coverage of its online services now reaching 75% of its shoppers, Kroger is continuing to successfully build on the foundations it has steadily been putting in place.

UK-based Online grocer Ocado has announced its fifth international deal, with US grocery retailer Kroger. Under the terms of the agreement, Ocado's technology will be used in the US exclusively by Kroger, with the US firm also increasing its investment in the company by five percent. This will bring its investment in Ocado to more than six percent. 

Identifying up to 20 sites for development

The deal gives Kroger the rights to use Ocado’s technology for grocery and other food distribution related activities in the US on an exclusive basis. In exchange, Kroger will pay monthly exclusivity and consultancy fees which will offset in part the total fees that are expected to be agreed between the two parties. The two companies are currently working to identify the first three sites in 2018 for the development of new, automated warehouse facilities, while up to a total of 20 sites will be identified over the first three years of the agreement. This highlights the scale of the deal for both companies. 

Ocado’s chief executive, Tim Steiner, said: “The opportunity to partner with Kroger to transform the way in which US customers buy grocery represents a huge opportunity to redefine the grocery experience of Kroger’s customers and create value for the stakeholders of both Kroger and Ocado.”

Shifting focus to delivery options in the US

The agreement comes as retailers continue to scale up in the channel. While store pickup options have been a major focus for US retailers, including Kroger, the focus this year has shifted to home delivery. Several retailers have signed agreements with the on-demand delivery platform, Instacart, to build a presence in the channel. Over the last year, these include Costco, Sam's Club, Wegmans and Publix. This year, Walmart has also started to roll-out home delivery in partnership with several companies to 100 metro areas, Amazon is expanding its Prime Now service at Whole Foods Market, while Target is optimising its acquisition of Shipt last year to roll-out same-day delivery.

Kroger digital sales up 90% last year

Kroger has also been partnering with Instacart and other on-demand services for home delivery, with the service available in just under 900 locations. Along with its store pickup model, ClickList, this helped the retailer to grow its digital sales more than 90% during its 2017 financial year. This year, it plans to add around 500 additional stores offering the ClickList service. The future of its existing delivery partnerships remains unclear, although they are likely to be in place for some time as it will take several years for the partnership with Ocado to scale up.

Ocado’s growing number of international partners

The deal with Kroger is the latest in a number of tie-ups announced by Ocado in recent months. Earlier this month, it announced a deal to support Swedish supermarket ICA’s online grocery business, following deals with Canada-based Sobeys and France-based Casino. The retailer also announced an agreement with an unnamed partner last June, making Kroger its fifth international partner.

This latest deal for Ocado means that is has entry into the world’s biggest market, and its role as a provider of retail technology is continuing to gain momentum.


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