Kroger acknowledges that its bet on robotics went too far
2 days ago
- #retail-automation
- #grocery-delivery
- #e-commerce-strategy
- Kroger announces closure of three robotic e-commerce fulfillment facilities, marking a shift from its previous automation-focused strategy.
- Previously, Kroger planned to expand high-tech fulfillment centers in partnership with Ocado, a UK-based warehouse automation company.
- Kroger paused the Ocado project in September 2023 to assess performance benchmarks of existing facilities.
- By March 2024, Kroger closed three spoke facilities linked to robotic centers, citing unmet success benchmarks.
- Interim CEO Ron Sargent announced a full review of the Ocado network and refocused e-commerce efforts on Kroger's 2,700+ supermarkets.
- Kroger's automation strategy faltered due to low order volumes and high operational costs, especially in non-urban locations.
- The company will incur $2.6 billion in charges but expects a $400 million boost from e-commerce adjustments.
- Kroger acknowledges consumer preference for fast delivery, deepening partnerships with third-party services like Instacart and DoorDash.
- Micro-fulfillment technology in stores faces challenges, with cost-effectiveness limited to high-volume markets.
- Ocado's stock plummets as Kroger's retreat from automation deals a blow to its warehouse technology business.