Coming this Spring: The Future of Home Food Delivery by Kroger.
Kroger announced on Wednesday that the first of 20 customer fulfillment centers planned nationwide will begin delivering groceries from Monroe, a northern suburb of Cincinnati, to provide improved, more reliable and ultimately lower cost service to customers.
Kroger employees gave The Enquirer a look inside the new facility to improve the customer experience and further advance digital sales.
“It’s another vital element of serving our customers anywhere, anytime,” Rodney McMullen, CEO of Kroger, told The Enquirer.
Kroger’s new facility, a giant concrete box on Hamilton Lebanon Road in Butler County, is robot-powered and set up to process thousands of digital orders within a 90-mile radius – as far as Dayton, Columbus, Indianapolis and Louisville.
How Kroger plans to use fulfillment centers to improve home delivery
The $ 55 million facility will serve as a “hub” for “spoke” operations set up in these cities, according to company officials. This is all part of a larger plan – first announced in 2018 – to work with UK-based partner Ocado to build a nationwide network of robotic warehouses to increase home delivery.
Kroger plans to open similar facilities in: Atlanta; Dallas; Frederick, Maryland; Groveland, Florida; Phoenix; Pleasant Prairie, Wisconsin; and Romulus, Michigan. It also has locations in the Pacific Northwest and western states in mind. As the network expands, Kroger will announce additional locations.
Earlier this year, Kroger announced that its digital shopping business more than doubled to $ 10 billion in 2020. This makes the company just as big an e-commerce provider as eBay. Kroger has promised to double that by the end of 2023.
While most of Kroger’s current digital business is customers clicking online to later pick up groceries in the parking lot, home delivery is growing faster – more than 150% in the last year.
Why Kroger pays more attention to the digital
Kroger tested the facility last month and delivered groceries to family members of employees. On Wednesday, Kroger officials announced that a similar “gentle opening” had begun at its second facility in Groveland, Fla., A suburb of Orlando.
This facility shows how serious Kroger is about digital growth: Kroger has a Harris Teeter business in Florida, but the company is planning the new facility, which will serve markets from Tampa to Miami.
What does this mean for Kroger buyers?
Kroger shoppers can already have groceries delivered to their homes in Cincinnati and across the country. Currently, most of this service is provided through Instacart and other third-party partners.
What is changing is that Kroger handles a large part of its own supplies. With the move, the company will improve consistency and service quality.
For the customer, this means that you don’t have to tip the delivery driver who shows up in a Kroger truck wearing a light blue uniform.
Customers could also save money as Kroger looks carefullyfor a delivery fee of $ 9.95. The company is considering lowering this for deliveries a few days in advance.
Shoppers can fill their pantries, fridges and freezers with corn flakes, ice cream and fresh produce.
This driver can also make adjustments to your order on site. Broke an egg? They give you a discount. Don’t you want the Diet Coke you swapped for your Coke Zero Sugar? They leave that out and adjust your order.
McMullen doesn’t see home delivery replacing brick and mortar stores. Instead, he envisions that many customers’ shopping habits evolve towards buying staples like cereal or toilet paper for home delivery and continuing to shop for items like products in person.
“Very few of our customers are all digital,” said McMullen. “Most people prefer to get involved in different ways.”
Jobs are coming, but robots do the heavy lifting at Kroger
The service change also means more jobs at Kroger – the company is actively hiring for the facility, which will ultimately employ around 400 people. His partner Ocado will also station other employees at the facility.
While the system is highly automated – with around 1,000 robots – the machines literally change heavy lifting. They lift, sort, and move hundreds of pounds of grocery stored at the facility while multiple “personal buyers” assemble individual orders from bins brought to workplaces by the bots.
Kroger also hires drivers for all delivery trucks that are stationed at the facility.
What about the Kroger facility?
Kroger officials are carefully guarding the technology secrets in the new facility. They wouldn’t allow outside cameras.
Fortunately, it’s not that photogenic. Kroger’s online shop is a 375,000 square meter warehouse and about a third larger than an IKEA shop. Inside it looks – like in a warehouse – made of concrete walls, bare metal beams.
In the center of the facility is a multi-story, cubic shelf – dozens of feet wide and deep – that Kroger officials have called “The Hive.” It’s filled with large plastic tubs that hold food from all parts of a store. There are also chilled and frozen sections.
The look at the top of the beehive gives you the best idea of how it works. That’s where the robots are.
Upstairs, hundreds of robots – each the size of a dormitory refrigerator – move back and forth upstairs, then dive down into The Hive to find food containers.
The bots deliver the trash cans to workstations, where personal buyers each put together three food orders. Completed orders are directed to shipping areas on the sides of the facility where they are loaded onto trucks.
Kroger officials aren’t sure how much volume to expect from the facility. The processing operations are divided into seven “modules” which, according to the company, can process orders valued at $ 80 million to $ 100 million per piece. This suggests that when fully operational, the facility could generate sales of up to $ 700 million – but the company wouldn’t provide a timeline for that.
Kroger confirms that each van will carry 20 or more orders and expects 200 to 250 vans to be used at the facility. 150 or more vans per unit can be used for language facilities in the surrounding large cities.
In addition to the Kroger stores, the grocer operates several regional supermarket chains in 35 states, including Fred Meyer, Harris Teeter, Ralphs, Marianos, Frys, Smiths, King Soopers, QFC and others. The company has almost 2,800 branches and employs almost 500,000 people.
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