CNBC: Is Amazon Killing Kroger? Not So Fast; They’re Fighting Back with Automated Grocery Fulfillment Centers

Self Checkout Kroger Marianos
Self Checkout Kroger Marianos.

In 2017, Amazon announced its intent to purchase grocery chain Whole Foods. For Kroger this was the latest challenge in the brand’s 136 year old history. Starting in the 1980s and ’90s the brand faced challenges from Walmart. But now Kroger is fighting back as it develops a partnership with Microsoft to take on Amazon’s cashierless stores.

Kroger (KR) is ranked #17 on the Fortune 500 rankings of the largest United States corporations by total revenue. Kroger is the second-largest general retailer (behind Walmart). CNBC’s report might be gloomier than the actual situation for Kroger.

Kroger is the parent company of Mariano’s. On November 11, 2015, Kroger and Roundy’s (Roundy’s, Pick ‘n Save, Mariano’s, Metro Market and Copps) announced a definitive merger valued at $800 million, including debt. The acquisition meant Kroger was back in Wisconsin after a 43-year absence.

Kroger recently upgraded their store to more efficiently handle curb site delivery and installed self-checkout at the Arlington Heights store — a feature removed at Jewel-Osco about 3 years ago. The Arlington Heights Mariano’s store is one of Mariano’s busiest stores.

Kroger is moving into Central Florida with plans to build an automated warehouse with the capacity of 24 to 30 grocery stores for online delivery. The specific location has not been announced, but it is expected to be somewhere in or near Lakeland or Plant City or East Tampa. Kroger’s high-tech grocery fulfilment centers involve a partnership with Ocado Solutions — a British online grocery retailer that uses robots on a grid that transport products at speeds up to 9 MPH in a grid in a large warehouse. Twenty Kroger automated grocery fulfilment centers are planned for the United States, but the initial center is going to be located near competitor Publix, which has headquarters in Lakeland, Florida.

The Simple Truth Organic brand was offered with an expanding role in 2014. For the first time, Kroger is delving into making its own gluten-free products, including flour mixes, bread, etc. Other STO products include pizzas, chips, juice, milk, broths, oatmeal, cranberry sauce, sliced peaches, canned tomatoes and more. Simple Truth Organic also has its own website (copyright Kroger).

Tech Insider: Ocado’s new warehouse has thousands of robots zooming around a grid system to pack groceries. The thousands of robots can process 65,000 orders every week. They communicate on a 4G network to avoid bumping into each other. Is this the future of retail?

Ocado Solutions: In this 360° tour of our automated warehouse in Andover, we speak with some of the people who were instrumental to building the software and infrastructure systems that power this state-of-the-art facility.

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Self Checkout Kroger Marianos
Self Checkout Kroger Mariano’s Arlington Heights.
Self Checkout Mariano's
Self Checkout Mariano’s Arlington Heights.
Mariano's Self Checkout under construction in Arlington Heights
Mariano’s Self Checkout under construction (Jan. 10, 2019).