San Antonio Express-News (Sunday)
3 things to know about Kroger
San Antonio's supermarket sector has long been a battle between two giants: H-E-B, the hometown favorite, and the national behemoth Walmart.
Now another national chain, Kroger, is shaking things up with plans to build what it calls a “spoke facility” on the Northeast Side — basically a warehouse that will keep groceries and other products for delivery — that will work in conjunction with “the hub,” a fulfillment center in Dallas operated by a ballet of robots, which is expected to open this spring.
Kroger won't be opening a brick-and-mortar store in the Alamo City but said it expects to have its delivery service operational by the end of this year. Working with Ocado, a U.K.based e-commerce company that's spent the past 20 years developing methods to efficiently manage a supply chain through automation, the supermarket chain plans to open another “spoke” on Austin's northeast side this year.
Based in Cincinnati, Kroger has a history in San Antonio: It operated 15 stores here until closing them in 1993 amid a labor dispute.
Here are three things you should know about Kroger, its partnership with Ocado and the impact the companies could have on San Antonio.
1. It’s the nation’s largest supermarket chain
Kroger is the nation's largest supermarket chain by annual sales. In 2020, it had $132.5 billion in sales and 2,742 stores, according to Supermarketnews.com. H-E-B ranked sixth that year, with
$31.75 billion and 351 stores.
Founded in 1883 by businessman Barney Kroger, the son of German immigrants, Kroger has merged with several other chains over the course of its history including Dillon Cos. in 1983, Fred Meyer in 1999, Harris Teeter in 2014 and Roundy's in 2015.
In Texas, Kroger has 218 retail stores, mostly in the Dallas and Houston metro areas, with
30,169 employees, according to a fact sheet on its website. As of 2019, the company served 11 million customers a day.
Like H-E-B, Kroger offers its own brands of products, ranging from pizzas and yogurt to paper towels and beauty products. Also like H-E-B, the products are sold in what it calls “tiers”: Where H-E-B has the more upscale Central Market brand, Kroger has its Private Selection brand.
Unlike privately held H-E-B,
Kroger is a publicly owned company whose shares trade on the New York Stock Exchange.
2. It’s building a delivery network spanning the U.S.
Kroger's partner Ocado was founded in 2000 in the United Kingdom with a mission to allow consumers to shop for groceries online, according to its website. In 2002, it opened its first customer fulfillment center in Hatfield, England. It has been listed on the London Stock Exchange since 2010.
The company grew fast during the 2010s, becoming a world leader in automation to make supply chains more efficient. In 2011, it opened its first international office in Krakov, Poland. In 2017 and 2018, it entered partnerships with supermarkets in Spain, France, Sweden and Canada. Since then, it has expanded
into Japan and Australia.
Kroger and Ocado inked an “exclusive partnership agreement” in 2018 allowing the supermarket chain to use Ocado's technology to allow its customers to order groceries online and have them delivered.
“We know Ocado's value is not just its current capabilities, but also in how quickly they innovate to serve a rapidly developing online consumer market,” Rodney McMullen, Kroger chairman and CEO, wrote in a 2019 letter to shareholders. “What is really exciting about Ocado is that their model to deliver to customers is significantly less costly than our existing model.”
The companies have worked to build a “hub-and-spoke” delivery network. At the hub sites, more than 1,000 robots “whizz around giant 3D grids,” known as “The Hive,” according to Kroger's
news release this month announcing its expansion into San Antonio and Austin.
By last summer, Kroger and Ocado opened their first two automated warehouses in Monroe, Ohio, north of Cincinnati, and Groveland, Florida, outside of Orlando, marking the chain's entry into the Sunshine State. As of now, Kroger delivers groceries in Florida but has no actual stores there.
3. It’s moving aggressively into e-commerce
Along with Ocado, Kroger has partnered with several other tech companies to expand delivery services. Among them is Nuro, which aims to use robotics, including self-driving cars, to deliver goods to customers' homes. And with Instacart, a delivery app, Kroger offers Kroger Delivery Now, a delivery option customers can select through its website. It also offers online ordering and pickup through its app and website.
Another partner is ClusterTruck, an app that offers freshly-made meals for delivery. Kroger plans to set aside space at some of its stores where ClusterTruck employees will prepare meals for delivery and in-store pickup.
“We are actively encouraging customers to engage with us on our digital platforms, even when shopping in store. That's because when a customer engages with us digitally, they spend more with Kroger,” McMullen said last year, according to Reuters.
The company is also piloting a drone delivery service in partnership with a company called Drone Express, according to its website, allowing it to make deliveries not only to customers' homes but to where they're standing with their smartphone.