Latest News
News Feature image

Kroger partners with Loop, a circular ecommerce platform developed by TerraCycle, to advance its zero-waste vision by reducing the usage of single-use plastics.

More News

Driverless grocery delivery has been officially rolled out in Houston thanks to a partnership with robotics company Nuro.

Second city to trial the technology

After a successful trial in Scottsdale, Arizona, Houston becomes the second area to pilot the service. The new delivery service will be initially available from its South Post Oak store before being extended to its Buffalo Speedway store later this spring.

According to the Houston Business Journal, Kroger has already pinpointed between 12 and 14 additional stores where the service can be potentially implemented.

To start with, a self-driving manual Toyota Prius fleet will be used before introducing later this year Nuro’s custom driverless delivery vehicles. $5.95 is what customers would have to pay for same-day and next-day deliveries. No minimum order is required, and groceries must be collected directly by customers from the vehicle along the pavement.

Kroger has already been pushing forward with automated last mile trials. Check out the build-up to this implementation.

Kroger will open its second Customer Fulfilment Centre (CFC), as part of its strategic partnership with UK-based Ocado, in Groveland, Lake County, Florida.

Entering the market with an ecommerce-only model

Kroger announced in February that one of its first three CFCs would be in Florida, with other sites being developed in Ohio and the Mid-Atlantic region. The decision to site one of the CFCs in Florida is particularly interesting because the retailer does not currently operate any stores in the state. However, it does have a strategic relationship with Lucky’s Market which has been expanding at pace in the region.

Source: Kroger

Will determine feasibility of operating in the north east

Last year, Kroger formed a strategic partnership with Ocado to develop up to 20 CFCs. These will support the growth of its grocery ecommerce business which currently includes store pickup, same-day delivery in partnership with Instacart and a two-day consumables shipping programme, Kroger Ship. The 375,000 sq ft site in Florida is expected to become operational in 2021. The success of an ecommerce-only model in the state will determine where else the retailer could penetrate without opening any physical stores. The high density, yet competitive, north east is likely to be within the retailer’s sights.

Different models under development

Kroger is adopting a relatively unique approach to ecommerce fulfilment in the US through its Ocado partnership. Several other models are being piloted as retailers seek to build a cost optimal solution. Walmart, Ahold Delhaize and Albertsons are piloting hyper-local robotic fulfilment while most US grocers are partnering with third-party crowd-sourced delivery platforms for same-day delivery. Instacart, the leading operator in this space, will start to roll-out a store pickup model this year. With the channel forecast to hit $60bn by 2023, building a profitable and scalable model is critical for retailers aiming to maximise the sales growth opportunity.

Kroger is expanding its autonomous grocery delivery service to Houston, following an earlier test in Scottsdale, Arizona.

Almost 1,000 deliveries completed as part of pilot programme

Kroger is working with self-driving vehicle company, Nuro, for the expansion of this programme. It will operate from two Kroger stores in the Houston market, making deliveries into four zip codes. Like Scottsdale, the pilot will start with Nuro's self-driving Toyota Prius fleet before introducing the next generation of the custom driverless vehicle later this year. Through the first stage of the pilot, Kroger and Nuro have successfully and safely completed thousands of deliveries to customers in Scottsdale.

Potential to significantly scale-up in Houston

The initial pilot has confirmed for Kroger the flexibility and benefits provided by autonomous vehicles. Customers have also been very receptive to having their groceries delivered in this way. Through moving the test to Houston, where Kroger has a significant presence, there is an opportunity to significantly scale up the programme in the future.

Improving the economics of grocery ecommerce

Self-driving vehicles could be an important component in improving the economics of grocery ecommerce. Last-mile delivery represent a significant proportion of overall costs. Retailers in North America are currently testing several fulfilment and delivery models as they look to reduce channel costs. These include hyper-local robotic fulfilment, third-party crowd-sourced delivery platforms and shared, centralised distribution models.

Kroger is just one of many retailers pushing forward with automated last mile trials. Check out our delivering the goods blog, which rounds up all the latest developments and what’s driving them.

Presentations

07/08/2018
The Kroger Co. is partnering with Nuro, a maker of fully unmanned vehicles, to pilot on-road, autonomous delivery vehicles.
19/02/2018
An essential summary of supply chain priorities, latest network developments, and other key statistics for Kroger.
03/02/2017
Learn how click and collect is developing in the UK, France and the US, and how you could create a seamless omnichannel experience for your customers.

Businesses around the world and from all sectors are currently investing heavily in robotics, aiming to develop greater efficiency and competitiveness In this report, IGD showcases 18 innovations in robotics from around the world which are relevant to the grocery industry, addressing the needs of businesses and shoppers.

Get the latest headlines delivered directly to your inbox every Thursday.

A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.