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Kroger launches high-tech facility as the digital competition between grocery stores heats up


Kroger Co.
KR,
-0.98%

opened its newest high-tech application center on Tuesday, the first in the US to be powered by Ocado Group PLC, a UK-based robot and software company.

Located north of Cincinnati in Monroe, OH and measuring 375,000 square feet, the facility, also known as a “warehouse”, has more than 1,000 bots operating on a 3D grid known as a “hive”. Bots organize customer orders so that, for example, eggs are strategically placed to avoid breakage and items are packed to minimize the number of bags used.

The facility will also employ nearly 400 associates focusing on tasks such as customer service and engineering.

The Monroe facility will have seven modules, each capable of handling between $ 80 million and $ 100 million in annual sales, according to Kroger.

The Temperature Controlled Kroger Delivery Truck can hold up to 20 orders. Through the use of machine learning, optimized delivery routes, including things like work on the road and fuel use. In the three minutes he spoke, dozens of orders could be filled, according to comments in a media event Wednesday from Kroger’s supply chain manager Gabriel Arreaga.

Kroger
KR,
-0.98%

and Ocado
OCDDY,
-0.52%

OECD,
-1.39%

established a partnership in 2018 to bring Ocado’s technology to the United States, and plans to open more customer response centers nationwide, including smaller facilities and other models, as well. such as using Ocado software. One facility in Groveland, FL, a new market for Kroger, is also in operation, and other facilities in Atlanta, Dallas, Phoenix and in the Pacific Northwest and the West are planned.

See: Smoothies and salads: Kroger said these four items accounted for 28% of its product sales

Kroger’s newest Ocado facility can handle thousands of orders in a single day. Pictures via Kroger

Rodney McMullen, CEO of Kroger, said: “2020 is a pivotal year for grocery e-commerce, with Kroger’s digital business scaling to over $ 10 billion – and hitting gets a record 116% increase in digital sales ”.

In Kroger’s Fourth quarter, Digital sales were up 118%.

“The driving force we are experiencing comes in time with the development of Kroger Delivery, laying the basis for a lasting change in the behavior of grocery consumers, and
need the modern breakthrough and e-commerce and ultimate solutions – today’s truth
competitive horsepower. “

Also: Online grocery store Ocado removes Amazon as ‘very small competitor’ before launching Kroger’s first warehouse.

Kroger Delivery offers deliveries of up to 90 miles from one central location. The system will also use Kroger stores and third parties for delivery assistance.

Grocers have increased their technological capabilities as more and more consumers go online to shop for their food.

As reported by JLL’s Grocery Tracker in 2021, online groceries grew by 52%. JLL provides market research, retail business insights and retail asset management services.

Grocers are investing in technology and other infrastructure to keep pace with customers who are currently expecting the convenience of an online grocery store.

“One of the biggest obstacles to completing orders online is the inefficiency of groceries picking items to pick up or ship with shoppers,” the report says. at store.

And: Amazon launches new food brand, Aplenty

Albertsons Cos. Inc.
ACI,
+ 1.34%

announced in March that they are already partnering with Google
GOOG,
-0.25%

GOOGL,
-0.21%

to make the shopping experience easier with use artificial intelligence.

And other large retailers sell groceries like Target Corp.
TGT,
+ 0.16%
,
Walmart Inc.
WMT,
-0.29%

and Costco Wholesale Corp.
PRICE,
-0.52%
,
discussed using technology to enhance their capabilities online, in-store, on-app and through their delivery service.

Leading the investor day rollout, Kroger said it will also focus on private brands, a $ 26 billion business by 2020, and fresh food as part of its strategy. growth.

Read: Aim to launch another food and beverage brand in April, Favorite Day

Shares of Kroger are up 17.2% this year, while the S&P 500 Index
SPX,
-0.29%

increased 10.4% during this period.

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