Kroger Announces Deal With Ocado to Speed Up Grocery Delivery

Kroger announced a deal this week with British online grocer Ocado to help improve its grocery delivery services through the construction of robotically operated warehouses. A report by Reuters states the deal is Ocado's first in the United States and company’s fourth major agreement with retailers in six months. Kroger CEO Rodney McMullen called the partnership “transformative.” Kroger has roughly 2,800 stores in 34 mainly Midwest and Southern states, and offers delivery from 1,100 stores. Currently, orders are filled at individual stores and delivery is handled in-house by Kroger and by third-party providers Instacart and Target Corp-owned Shipt.

Total Retail’s Take: Kroger has made a concerted effort over the last few months to strengthen its e-commerce business and put itself in a better position to compete against Amazon.com, Walmart, Target and other grocers that have invested in delivery services. Since Amazon’s acquisition of Whole Foods last summer, grocers have been forced to re-evaluate their digital businesses. If they hope to capture their share of the growing online grocery business, they need to match what Amazon is going to give customers. Kroger, which has had its ups (launching cashier-less checkout technology before Amazon’s release) and downs (Boxed’s rejection of Kroger’s acquisition proposal), is investing in Ocado to speed the order fulfillment and delivery process for online customers. What I find to be particularly interesting is that while online grocery is rather new — 55.5 percent of shoppers haven’t purchased groceries online yet, myself included — it’s already incredibly competitive. Brands are forecasting a surge in this category, and each one wants to be the company that capitalizes on it.