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The Spoon

Daily news and analysis about the food tech revolution

grocery fulfillment

Kroger Officially Launches its First Robotic Customer Fulfillment Center

Grocery giant Kroger officially opened the first of its automated Customer Fulfillment Centers today in Monroe, Ohio, just north of Cincinnatti. Kroger had soft-opened the facility at the beginning of March, but today marks it’s official debut.

The Monroe CFC is 375,000 square feet and is powered by Ocado‘s automation technology. The CFC features 1,000 robots scurrying around carrying food items on giant 3D grids, managed by a proprietary air-traffic control system. When an order comes in, the robots assemble the items, which are bagged and placed in a temperature-controlled van and sent out for delivery. The CFC currently services a 90-mile radius from the hub location, though that radius will increase as spokes are set up that can extend that reach.

Kroger first announced its automated CFC initiative back in 2018, well before the pandemic pushed record numbers of people into grocery e-commerce and delivery. The opening of Kroger’s first CFC couldn’t have come at a better time for the company. In a press announcement released today, Kroger said that 2020 saw its e-commerce business scale to more than $10 billion with a record digital sales increase of 116 percent.

Online grocery shopping is predicted to hit $250 billion by 2025, taking up 21.5 percent of total grocery sales. As such, the entire grocery sector has been adapting to this e-commerce shift. Stalwarts like Kroger, Alberstons and Walmart have all invested heavily in automation and order fulfillment. Amazon is building out its own chain of physical grocery stores. And there has been a massive funding spree since the start of the year on grocery related startups.

The Monroe CFC is just the first such facility Kroger is opening. The company says the next CFC to open will be in Groveland, Florida this spring. After that, the company will open CFCs in Atlanta, Georgia; Dallas, Texas; Frederick, Maryland; Phoenix, Arizona; Pleasant Prairie, Wisconsin; Romulus, Michigan; and centers in the Pacific Northwest and West regions.

If you are interested in the future of grocery automation, be sure to attend ArticulATE, our virtual food robotics summit on May 18!

Urbx’ Vertical Automated Grocery Fulfillment has High Ambitions

As they come to market, automated grocery fulfillment solutions are taking a number of different shapes. Companies like Takeoff Technologies and Dematic are building them into the backs of existing stores, while Kroger and Ocado are building out big, standalone smart warehouses.

Unlike those other players in the space, Urbx wants its automated fulfillment center to get high — vertically speaking. The Boston-based company is working on robotic fulfillment that scales up to 150 ft. tall. While the Urbx system is tall, it only takes up 1,800 sq. ft., so it can nestle into the limited, tight real estate areas in cities. As Urbx CEO, Lincoln Cavalieri explained to me by phone this week, Urbx is “ideal for urban environments, food deserts, where property prices are high.”

Urbx has a dual go-to market strategy. First, like other automated fulfillment technology companies, Urbx will work with third-parties to integrate its automation into other stores. At the same time, Cavalieri said that the company will eventually build “thousands” of its own Urbx-branded automated markets. But these Urbx markets won’t be anything like a traditional grocery store.

The Urbx market won’t have any aisles to roam or bakery sections to get treats from. Instead, the “store” part will be a series of kiosks. Shoppers can either place their order by mobile phone or at the kiosk. Cavalieri said once an order is placed, Urbx’ robots can pack an order of 50 items in less than two minutes. (A 25-item order takes just a little over one minute.) Robots then deliver the packed items to the kiosk for the customer to take out.

Urbx will also have curbside pickup, delivery via electric bicycles and, at some point down the line, drone delivery.

All of this, however, is still a ways away. The company has only raised a seed round of funding and won’t have its first third-party implementations ready to be installed until the end of this year. Urbx hopes to have its first Urbx market developed by the end of next year.

This is certainly the right time to launch an automated fulfillment solution. The COVID-19 pandemic pushed record amounts of people into grocery e-commerce, which is expected to grow to take up 21.5 percent of total grocery sales by 2025.

As such, many retailers are accelerating their automation endeavors to keep up with e-commerce demand. Alberstons is expanding its use of automated fulfillment centers and testing out robotic pickup kiosks. And Walmart is working with three different companies to deploy automated fulfillment centers to dozens of locations this year.

With plans for its own line of supermarkets, Urbx is the most ambitious automated fulfillment startup we’ve covered so far. Now we just have to see if rollout of tall centers can match the height of its goals.

Ahold Delhaize Launching Automated Fulfillment Center in Philadelphia

Ahold Delhaize announced today that it is building out an automated fulfillment center in Philadelphia (hat tip to Winsight Grocery Business). When completed, this facility will be able to fulfill 15,000 online delivery orders a week.

This new fulfillment pilot will be powered by Peapod Digital Labs, Ahold Delhaize’s in-house e-commerce engine, and offered to customers of the Giant Co. market. Ahold Delhaize is also working with Swisslog’s AutoStore for the robotics and software systems for the automated fulfillment center.

This is not Ahold’s first trip to the robotic fulfillment center rodeo. The company owns a majority stake in FreshDirect, which is using Fabric for a Washington D.C.-area fulfillment center. And in 2018, the company announced it was working with Takeoff Technologies to create a number of micro-fulfillment centers for its retail brands including Stop & Shop, Food Lion and Giant Food. According to Winsight, Ahold said today more micro-fulfillment pilots are forthcoming.

Ahold Delhaize’s expanded use of automation is no surprise. Grocery e-commerce had a banner year in 2020, thanks in large part to the pandemic keeping people at home. Online grocery is expected to remain sticky with consumers even after the pandemic recedes with some projecting online grocery taking up 21.5 percent of total grocery sales by 2025.

As such, grocery retailers are investing in new ways of getting people their food faster. Kroger is building out a series of Ocado-powered automated fulfillment centers across the U.S. Walmart is planning to implement dozens of automated micro-fulfillment centers at its stores. And Albertsons is expanding the use of automated fulfillment as well.

Most of these, however have been announcements. We’ll need to watch this space in the coming months to see if automated fulfillment centers truly deliver on their promise of cost-effective, increased efficiency.

Stop & Shop Pilots Locker Pickup at Boston Location

Grocery retailer Stop & Shop is testing out the use of pickup lockers at one of its Boston stores (hat tip to Supermarket News). The temperature-controlled lockers allow customers to place an order online and have that order assembled and securely kept in-store until pickup.

The new lockers have three temperature settings: frozen, refrigerated and room temperature. After placing an order, the customer selects the locker option and a 45-minute time window for pickup. Customers receive a code via text within 15 minutes of their pickup time that they scan or enter on the locker kiosk screen. A light on the locker containing their order will flash and the door will unlock, allowing customers to grab their goods and go.

Stop & Shop is charging $2.95 for locker pickup and customers can’t order alcohol or other age-restricted items. There are also size restrictions, so presumably no ordering a 20-pack of paper towels.

If this pilot is successful, Stop & Shop says it could roll them out to more stores.

Pickup lockers are poised to become a regular feature at the grocer store. Albertsons launched two different takes on unattended pickup in recent months. In October, the company launched locker pickup at select Chicago Jewel-Osco locations in Chicago. Then in January of this year, the company debuted its robotic pickup kiosk, also at a Chicago Jewel-Osco.

Grocers are experimenting with new ways to get customers their groceries faster. The pandemic has more people shopping for groceries online, and at-store pickup can be a more convenient option for customers while being less costly for a retailer than ramping up home delivery.

In addition to these nascent locker programs, we’re also seeing retailers like Walmart, Albertsons and H-E-B increased their use of in-store automated order fulfillment. Kroger is meeting its e-commerce demand by building out large automated warehouses across the country to fullfill orders.

I expect we’ll see more locker options added to grocery stores, along with the incentive to use them, throughout this year. It’s not quite as convenient as curbside pickup (i.e., customers have to get out of their cars), but in urban areas where people may shop on bike or foot, it should provide a more convenient grocery experience.

Instacart Expands Curbside Pickup Options for Retailers

Grocery fulfillment service, Instacart, announced this week it is expanding curbside pickup options for its retail partners.

Instacart currently provides curbside pickup services for more than 60 retailers, including ALDI, Food Lion, Publix, and starting this week, three Costcos in New Mexico. Instacart’s curbside pickup is available in more than 3,300 stores across 30 states today.

In its announcement, Instacart outlined the new order fulfillment and curbside pickup options for its retailers:

  • Partner Pick – Retailers use their own employees to pack and fulfill orders that come in through customized Instacart Pickup software
  • Instacart In-Store Shopper Pick – Instacart in-store Shoppers will pick and pack grocery orders for pickup
  • Full-Service – A new pilot program at select retailers where full-service Instacart Shoppers will be able to choose orders to pick, pack and stage for pickup or delivery

Last year, the pandemic pushed record number of shoppers into online grocery shopping, accelerating the need for more delivery and curbside pickup options. Even after the pandemic recedes, online grocery shopping is expected to grow and take up 21.5 percent of total grocery sales by 2025.

Curbside pickup is an attractive option for both retailers and shoppers. For retailers, it only requires setting up designated pickup areas in their parking lot and letting customers come to them. And for shoppers, the pickup option can be more convenient, fitting into their regular errand schedule and not requiring them to stay at home to wait for a delivery driver.

As such, retailers are implementing a number of different ways to get customers their pickup orders more efficiently. Albertsons, for instance, has made a number of moves including the use of robots to automate online order fulfillment at some stores, as well as trialing an automated pickup kiosk and temperature controlled pickup lockers.

With Instacart’s news this week, retailers who can’t afford fancy robotics to fulfill orders will be able to use their own employees to pick and pack, or leverage Instacart’s scalable gig workforce to do so.

It wasn’t all good news from Instacart, however. With some retailers using their own workforce for packing orders, Instacart also announced it would be laying off 2,000 employees, including it’s only unionized labor group.

Ocado Buys Kindred Systems and Haddington Dynamics for a Total of $287M

British grocer Ocado announced yesterday that it is bolstering its robotics capabilities with the acquisitions of North American companies Kindred Systems and Haddington Dynamics for a total of $287 million.

Kindred Systems is an AI company that develops piece-picking robots with computer vision and motion control. The technology uses deep reinforcement learning to help robots better handle the variety and types of items found in grocery. Haddington Dynamics builds “highly dextrous” robotic arms that can be 3D-printed and are subsequently low cost.

According to an Ocado presentation on the deal, the company spent $262 million in cash on Kindred and $25 million in cash and stock on Haddington. Both deals are expected to close in 2020.

Putting an obvious two and two together, with these purchases, Ocado is getting a smarter, more advanced system for picking groceries that the company can deploy at its automated smart warehouses.

In a broader sense, these deals come against the backdrop of the global pandemic, which pushed people to record amounts of online grocery shopping this year. While sales have come down from those record highs earlier this year, online grocery is still projected to make up 21.5 percent of total grocery sales by 2025, hitting $250 billion.

All of those orders will need to be fulfilled, and the speed at which orders can be processed and delivered to/picked up by consumers could determine the retail winners and losers in the new grocery landscape.

In a more specific sense, Kroger, which is an investor in Ocado, is using Ocado’s technology to build out automated fulfillment warehouses across the U.S. The first of those warehouses is set to open early next year. The ability to set up smarter robotic systems more quickly could translate into opening up those warehouses sooner.

Ocado isn’t the only robotic grocery fulfillment solution coming online. Takeoff Technologies, which builds micro-fulfillment centers in the backs of existing stores is expanding its relationship with Albertsons. And FreshDirect is using Fabric’s automated fulfillment system in the D.C. area.

With the pandemic still going strong coupled with the colder winter months upon us here in the northern hemisphere, there’s a good chance the online grocery shopping sales will crop back up as people avoid going outside. After eight months of pandemic living, the question will be how much has grocery e-commerce become a new everyday habit. If so, the robots will be ready.

Imperfect Foods Raises $72M to Expand Delivery of Ugly Produce and Pantry Goods

Imperfect Foods, the company that delivers surplus and “ugly” food directly to consumers, announced today that it had closed a $72 million Series C funding round. The round was led by Insight Partners with support from existing investors, including Norwest Venture Partners. This bumps the total amount raised by Imperfect up to $119.1 million.

You may have seen Imperfect Foods (formerly known as Imperfect Produce) boxes sitting on stoops around your neighborhood. Since 2015, the company has been delivering boxes of surplus and cosmetically imperfect produce — that is, fruits and vegetables that would normally go to waste — to consumers in curated boxes. The produce is discounted up to 30 percent compared to grocery store prices.

In an intriguing pivot, last year the company diversified into other grocery categories, like dairy, meat, and pantry items. Some of these were still “imperfect” products, like coffee beans that were too small or misshapen almonds, but others were not. Last year the company also launched a pilot program to pick up their delivery boxes for reuse.

With its new funds, Imperfect will continue to bring its grocery delivery to more areas across the country and add on to its fulfillment centers.

I received Imperfect boxes for a little over a year but discontinued them since, as a single person, I couldn’t use enough of my box to justify the cost. But ever since the pandemic has had me sheltering in place and dreading trips to the grocery store, I’ve missed my weekly boxes of produce and staples.

In fact, COVID-19 actually presents a valuable opportunity for Imperfect Foods. Surveys show that up to 60 percent of consumers are “fearful” of shopping inside grocery stores, while sales of online groceries are skyrocketing. Imperfect can provide the online grocery experience with a side of good conscience since you’re also cutting down on food waste.

Imperfect isn’t the only company to deliver ugly fruits and vegetables to consumers. Misfits Market also ships boxes of cosmetically flawed produce to consumers. Theirs is all organic, but the key difference is that you can’t choose what’s in your box, while Imperfect offers customization options.

In a time when consumers are relying on convenience and valuing their health perhaps more than ever, it’s a prime time for delivery services like Imperfect. Clearly investors feel the same way.

Albertsons and Takeoff Partner for Robot-powered Grocery Micro-Fulfillment

Grocery retailer Albertsons and Takeoff Technologies announced today that they are forming a strategic partnership with a dedicated teams to “collaborate on the evolution of microfulfillment,” according to the press release. Translation: Albertsons is getting more robots to grab your groceries.

Takeoff creates robot-driven micro-fulfillment centers to facilitate online grocery orders. The automated system consists of a series of tote boxes, rails and conveyors and is small enough to be built into the back of an existing grocery store. When an online order comes in the robots taxi each item to a human who packs them all up for delivery or pick up.

Today’s announcement expands on a pilot program Albertsons and Takeoff announced a little more than a year ago. The first micro-fulfillment center of that deal opened this past October in South San Francisco, with another set to open in San Jose before the end of the year.

A year in between the announcement of the pilot deal and its actual implementation may seem like a long time. But as Trung Nguyen, VP of eCommerce for Albertsons told us at our Articulate summit earlier this year, a company the size of Albertsons has to move cautiously when implementing new technologies. The grocer isn’t just interested in cool new solutions; those solutions have to work at scale immediately.

While online grocery shopping is still a small part of overall grocery shopping, it’s growing. Robot powered micro-fulfillment centers like Takeoff’s promise to not only speed up order fulfillment, but since they’re built into existing grocery stores, they push that fulfillment closer to the consumer. This, in turn, should translate into faster order turnaround for delivery or pickup (and more online grocery ordering).

This has been a big year for Takeoff. The startup added ShopRite and Loblaws as customers and raised $25 million.

While Albertsons is heading in Takeoff’s micro-fulfillment direction, rival grocery chain Kroger is going a different way. Kroger is an investor in and using Ocado’s robotics and software platform for online grocery fulfillment. Instead of building smaller centers in stores, Kroger/Ocado is building larger, standalone fulfillment warehouses throughout the country.

Regardless of the implementation, automation is coming to your local grocery store, and it looks like we’ll see a lot more of it happen next year.

Aeon to Bring Ocado’s Robotic Grocery Fulfillment Centers to Japan

Over the recent holiday break, Aeon, one of Japan’s biggest grocery store chains, announced a partnership to build out Ocado’s robotic fulfillment centers (h/t to ZDNet).

Based in the UK, Ocado is an online grocer with a high-tech platform that combines software and robotic smart warehouses to facilitate fast delivery for customers.

From the press announcement:

Aeon will launch a new company by March 2020 to enhance digital, using AI and robotics, to provide a more convenient online shopping experience for our consumers. Leveraging [Ocado Smart Platform], the first [Customer Fulfillment Center] in Japan will be built by 2023.

This is the latest international partnership for Ocado. The company has similar agreements with ICA Group in Sweden, Group Casino in France, and with Kroger here in the U.S. Kroger invested in Ocado and has already started building out a number of Ocado-style robotic warehouses in places like Dallas, TX and Monroe, OH.

Online grocery shopping is still a small percentage of overall grocery shopping, but it’s growing. Automated fulfillment facilities like those from Ocado and Takeoff will be coming online throughout the next year and could give online grocery shopping a boost by providing ultra fast order processing for either pickup or delivery.

It’s a trend we’ll definitely be watching, around the world, in 2020.

Kroger and Common Sense Robotics Each Announce New Grocery Robotic Fulfillment Centers

I get that it’s supposed to be three of something to make a trend, but the fact that two different companies a world apart made robot-fulfillment center opening announcements on the same day is totally indicative of a broader move towards grocery automation.

Here in the U.S., Kroger announced that Forest Park, GA, just outside of Atlanta, will be the next home of its Ocado-powered customer fulfillment center. Kroger will spend $55 million on this “shed,” as Kroger calls the centers, which will feature automated, robot-driven fulfillment of grocery orders. This is the third such shed of a planned 20 that the company plans to build. Other announced sheds are in Monroe, OH and Groveland, FL, with another one coming to the Mid-Atlantic region.

Over in Tel Aviv, Venture Beat reports that Common Sense Robotics has broken ground on a completely underground automated fulfillment center for an unnamed grocer. The new facility will be in a parking structure under the Shalom Meir Tower and will be 18,000 sq. feet. One of Common Sense’s selling points is that its vertically-oriented systems can better maximize available space and thus deliver full grocery store levels of product fulfillment in a fraction of the space.

That both of these stories happened on the same day is a coincidence, but it also highlights the moves grocery stores are making towards automation. Robotic fulfillment centers like these use totes on rails to quickly assemble items from online orders and hand them off to a human who puts them into bags for pickup or delivery. Robots can move faster than humans, they don’t get tired or need breaks, all of which can reduce the order fulfillment time down from hours to as little as a half hour for some systems.

This faster fulfillment is why so many grocery retailers are trying out robots. Takeoff Technologies has partnered with Ahold Delhaize and Albertsons, and Walmart is testing out automatic fulfillment through Alert Innovation. In each of those cases, robot-powered fulfillment centers are being built into the back of existing stores rather than off-site locations like Kroger and Common Sense’s.

These robotic fulfillment centers are very much in the early stages, but you can expect to see more of them over the next year as more grocers test and implement automation to get you your groceries faster.