Kroger has potentially changed the grocery landscape as we know it. They’ve teamed up with UK online grocery giant Ocado to create highly automated grocery fulfillment centers that can fulfill customer orders faster and more efficiently than ever.
Furthermore, this innovation reaches far enough to impact retail as a whole, paving the way for what should be an incredible new wave of customer-centric technology, hitting consumers over the next five years.
Here’s what the new project entails:
Supply Chain of the Future
Since its inception, the click-and-collect model of grocery shopping has been a huge hit with the public. Essentially, it enables you the freedom to order from home and collect when it’s convenient for you, instead of having to spend your valuable time walking through the aisles.
What makes Kroger and Ocado’s new concept so unique is that instead of relying on employees from each store to put together an order, it relays everything to a central automated warehouse facility, where it is processed by a fully automated system that’s much more efficient than a person could ever be.
Since everything is in one place, you also don’t get the strain on inventory that you would at smaller locations. Ocado CEO Luke Jensen put it best by saying, “The single biggest complaint around the world for a grocery store is missing items. From this kind of facility, we can get to a level of accuracy and fulfillment that’s much higher than what you can achieve in-store.”
Major Infrastructure Investments
To date, Kroger and Ocado have invested an incredible $50 million per warehouse, and plan to build a total of 20 of these fulfillment centers. The first two have officially broken ground in Ohio and Florida, with plans for the next five locations in the works as next steps. These major infrastructure investments are directly targeting a growing body of Millennial shoppers, who have largely been responsible for Kroger’s digital grocery business currently growing at a pace of 50% per year.
Kroger’s Chief Digital Officer, when asked about the new automated warehouse facilities, hailed the new partnership with Ocado by saying they bring “unprecedented automation and reliability to pickup and delivery.” It marks a huge step towards prioritizing customer experience in this industry and creating efficient new revenue streams for the business to capitalize on.
Flipping the model and making single, large warehouses the center of the supply chain instead of local stores and supermarkets is uncharted territory for most grocery brands, and continues to blur the lines between retail and grocery industry standards. If successful, it will give Kroger a competitive edge over the majority of the US market, and create a great roadmap for other companies to emulate moving forward.
Work with Worldlink
At Worldlink, we can help your store deploy technology solutions that make innovations like this a reality. Work with our team to create a faster, safer, and more reliable network that will help generate sales more efficiently than ever. This type of investing paints a clear picture for other major brands looking to the future: It’s time to rethink how we handle our supply chains and create an even more customer-centric approach to doing business.
Contact us to learn more, or give us a call at (949) 861-2830.