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The Spoon

Daily news and analysis about the food tech revolution

Kroger

Kroger Revs Up More Automation with Self-Driving Delivery Vehicle Partnership

Kroger, the largest supermarket chain in the U.S., today announced a partnership with robotics startup Nuro, in a deal that will bring same-day grocery delivery to homes via autonomous vehicles.

Nuro’s vehicles are “cars” in that they zip about on four wheels, but they are actually more like sleek, space-age pods built specifically for delivery. They are about half the size of a Toyota Corolla, have different compartments to hold groceries (and more), have a top speed of 25 mph, and oh yeah, no driver.

The partnership will eventually allow customers of Kroger‘s, which has 2,800 stores in 35 states, to order groceries and have them delivered that same day by one of Nuro’s li’l autonomous delivery vehicles. A pilot program between the two companies will roll out this fall, but details on that haven’t been announced yet.

The move from Kroger hits the gas, as it were, on the company betting big on automation. Kroger recently upped its investment in U.K.-based Ocado, and will bring that company’s smart, robot-driven warehouse technology and delivery logistics systems to the U.S.. Kroger will build 20 automated Ocado-style warehouses here over the next three years. So the robot warehouse will pack your groceries, which will then be delivered by self-driving car.

The competition to delivery your groceries fastest and become your supermarket of choice is fierce. Amazon, Albertsons, Walmart, and Target are all ramping up and rolling out two-hour delivery services across the country.

But this announcement should light a fire under delivery services like Instacart and Postmates, who could see their human-powered delivery networks usurped by tireless, unpaid delivery vehicles. Both Instacart and Postmates have done robot delivery partnerships with companies like Robby, who make smaller robots. Postmates also announced a partnership with Ford at CES this year for self-driving car deliveries.

The biggest hurdle facing Kroger may not be rival retailers, however. It could be city and state laws. Last year San Francisco tightened rules around delivery robots, and self-driving cars have made headlines this year by being involved in crashes, sometimes tragically fatal ones.

That isn’t stopping companies from getting into the self-driving delivery vehicle space. In addition to the aforementioned Ford program, CES also saw Toyota unveiling its customizeable e-Palette autonomous delivery vehicles that it hopes to have running around Tokyo in time for the 2020 Olympic games. And Robotmart wants to use self-driving vehicles to bring the grocery store to your door.

While we’re still a ways out from those autonomous delivery vehicles scurrying around neighborhood streets, moves like this from giants like Kroger will help accelerate them becoming a reality.

HelloFresh Jumps on Bandwagon to Sell Meal Kits in Grocery Stores

HelloFresh will start selling its meal kits at 600 Giant Food and Stop & Shop locations starting this week, The Wall Street Journal reports, as the meal kit sector’s migration from mail order to brick and mortar continues at a furious pace.

The first half of this year has seen a flurry of activity from meal kit companies going into grocery stores. Chef’d and Blue Apron started selling in Costcos. Plated is rolling out nationwide at Albertsons. And just a couple of weeks ago, Kroger bought Home Chef for $200 million to put that company’s product on store shelves. And that doesn’t even count the meal kits WalMart and Amazon have available in their own stores.

It’s not hard to see why. According to Nielsen, last year in-store meal kits generated $154.6 million in sales, and grew more than 26% year-over-year. It’s a hot sector, and in-store meal kits are something customers want.

Last month, Pat Brown, Albertsons Vice President of strategic business initiatives told CNBC: “Our internal research told us that 80 percent of our customers would love to see a meal kit option in the store. And what was more surprising was that 85 percent of customers that were already subscribing to meal kits wanted to see meal kits in the store.”

Customer churn has been a big issue for meal kits in the past as the cost and inconvenience of waiting for your meals to arrive by mail have been stumbling blocks for maintained meal kit subscriptions. Having meal kits in stores offers customers more convenience and more choice closer to when they actually make meals.

HelloFresh CEO Dominik Richter told The Journal that online subscription will continue to drive sales, and that going into grocery aisles was a way for the company to find new customers. He also said that HelloFresh is in talks with other retail outlets.

HelloFresh recently surpassed Blue Apron as the top meal kit company by market share in the U.S.. The Berlin-based company went public in the fall of last year, and in April the company acquired organic meal kit provider Green Chef.

This is a big and fast retail move for HelloFresh, which will start selling meal kits on store shelves starting this Wednesday. For comparison, Chef’d has done deals with numerous regional chains as well as Costco, Blue Apron is in 17 Costcos, and Plated will be in “hundreds” of Albertsons by the end of the year. Kroger, which had already rolled out meal kits to some of its regional chains such as QFC in Seattle, is planning to put meal kits in most of its 2,800 stores nationwide.

Clearly HelloFresh needs to act fast as the window of opportunity for meal kit companies in grocery stores appears to be closing rapidly. While it may be rolling out judiciously, Albertsons still owns Plated, so that will be its preferred meal kit provider. Same with Kroger and Home Chef. Amazon, of course, has Whole Foods, and WalMart has… itself. To stay alive in retail, and by extension alive as a business, HelloFresh will need to get into a lot more grocery stores.

Kroger Buys Home Chef for $200M as Meal Kits Continue March into Grocery Stores

Kroger announced today that it’s acquiring meal kit company Home Chef for $200 million in a move that illustrates the continued transition of meal kits from a mail-order business to a must-have in-store grocery item.

Home Chef will operate as subsidiary of Kroger, maintaining its e-commerce business at homechef.com while it takes over responsibility for Kroger’s “meal solutions portfolio.” Kroger will start offering Home Chef’s meal kits online once the deal closes, and, according to The Chicago Tribune, the two companies will crunch consumer data numbers to figure out where to stock meal kits among Kroger’s 2,800 nationwide stores.

Home Chef, which is the third largest meal kit company in the U.S., has 1,000 employees, has raised $57 million in venture funding and had sales of $250 million last year. Kroger’s final purchase price could hit $500 million over the next five years if certain milestones are hit, including, according to the press announcement, “significant growth of in-store and online meal kit sales.”

Depending on expectation, those milestones could be tough to hit; almost every grocer is getting into the meal kit game. Albertsons acquired Plated and is going national with their meal kits this year. Blue Apron and Chef’d are selling meal kits in Costco. Weight Watchers has put their meal kits on supermarket shelves. Then, of course, there are the meal kits Walmart is rolling out to 2,000 of its stores, not to mention the offerings from Amazon/Whole Foods.

And you can see why everyone’s diving in. As we’ve covered before: According to Nielsen research, “in the year ended 2017, in-store meal kits generated $154.6 million in sales, posting growth of more than 26% year-over-year. For context, total brick-and-mortar sales for center store edibles (grocery, dairy, frozen foods) dipped 0.1% last year to $374 billion.”

By acquiring Home Chef, Kroger can meaningfully jump into the meal kit space and scale up quickly. Home Chef brings with it national prep and distribution systems already in place, and lots of data from existing paying customers to maximize how meal kits are rolled out in stores.

But the acquisition also shows that Kroger is hitting the gas to stay technologically relevant. The Home Chef acquisition comes just days after Kroger invested more money in UK-based online grocer, Ocado. As part of that deal, Kroger will be building out 20 robot-driven smart warehouses and take advantage of Ocado’s fast delivery logistics.

Now it looks like meal kits will definitely be among those fast deliveries.

Want to learn about the future of meal kits and food delivery from the leaders of companies like Chef’d and DoorDash? Come to the Smart Kitchen Summit in Seattle on Oct 8-9th. 

Kroger Invests in Ocado, Will Use UK Grocer’s Tech in U.S.

Grocery giant, Kroger, announced today that it has entered into an exclusive partnership with Ocado, and will use the UK-based online grocer’s logistics and warehouse technology (ROBOTS!) here in the U.S. The move indicates that Kroger is ramping up its technological efforts as it looks to defend itself against the likes of Amazon and Walmart.

Ocado is known for fast deliveries and, according to CNN Money, Ocado said it will be helping Kroger with warehouse operations, logistics, delivery route planning and automation.

On the automation front, Ocado runs giant warehouses filled with smart robots that scurry around, carrying food. Tech Insider has this video showing the robots in action:

Inside A Warehouse Where Thousands Of Robots Pack Groceries

Kroger is wasting no time getting in on that robot action. From the press announcement: “Kroger and Ocado are already working to identify the first three sites in 2018 for development of new, automated warehouse facilities in the U.S., and will identify up to a total of 20 over the first three years of the agreement.”

This isn’t the first such deal for Ocado, which has licensed out its technology to grocery companies in France, Canada and Sweden.

Kroger has also increased its existing investment in Ocado by five percent in a subscription rights agreement, bringing its total investment to six percent.

Not living in the UK, I can’t speak to the actual quality of Ocado’s service (though the robots in the video are a sight to behold). But you have to wonder if Kroger’s move is too late.

Amazon, which is a logistics master and has its own warehouse automation, isn’t one to rest; it’s continuing to expand two-hour grocery delivery and discounts for its 100M Prime members at Whole Foods. Then there’s Walmart and Target, each of which are grow their same day delivery services. And Albertsons, which has partnered with Instacart to facilitate its own same day deliveries. And if all that wasn’t enough, there are the smaller, more focused players like Good Eggs, which just got $50 million to expand in California.

That’s not to write off Kroger’s. It’s a massive company with the capital to spend, let’s just see if it can implement that spending quickly enough.

No End in Sight for Innovation in the World of Food Delivery

Commerce’s path, from mall-based retail foot traffic to the ‘90s bloated iteration of digital shopping leading to Amazon’s far-reaching store-to-door tentacles, may appear to have taken a circumventurous route. The exact opposite is true. From the early days of the web to today’s AI/VR-powered shop-on-voice command, the value proposition remains the same—convenience.

The major change from clunky versions of e/t/m/d-commerce (electronic, TV, mobile, digital) to a more transparent experience results from a focus on partnerships and a more realistic view of the value chain. Amazon, as an example, understands that it cannot alone drive the future of purchasing goods and services; the Seattle-based giant has amassed an array of teammates from grocery chains to CPG manufacturers to department stores with Alexa-powered kiosks. There was a time, not so long ago, when Apple, Amazon, Google, and Apple wanted to own every building block from manufacturing to consumer products. Time and a lot of failed experiments had led to more realistic aspirations in the world of commerce.

Grocery delivery is a case in point. Early 2018 points to some dramatic changes in the world of home shopping. Players in the space—big and small–are breaking the meal journey down to micro inflection points to hit consumers when they are taking actions (or inactions, as the case may be) where ordering fresh food and pantry staples are likely to take place. For example, the term “shoppable recipes” is especially buzzy as it refers to turning the passive act of reading a recipe into an actionable event. Companies such as Chicory, Fexy, Serious Eats, Amazon, and Kroeger are using technology to allow home cooks to order ingredients in real time for a given recipe while scanning the step-by-step process of making tonight’s dinner.

Another key inflection point in the meal journey is the delivery process with a focus on the delivery of groceries (and other items) to residences when no one is home to accept packages. Amazon’s 2017 announcement of its Amazon Key at-home product/service raised significant skepticism but “homeowner not present” delivery services are gaining traction in the new year. With an understanding that in successful partnerships each party does what it’s best at, lock maker August (owner by lock giant Assa Alboy) is expanding its August Access delivery service which allows delivery to homes where the owner is away. Teaming up with Deliv, a UPS-backed delivery startup, grocers (using the Deliv Fresh service) and other retailers can securely open the front door of a home to drop off a package.

“Through this unique partnership, we are bringing a bit of magic to the shopping experience,” said Daphne Carmeli, CEO of Deliv, in a statement. “Deliv provides the last mile fulfillment solution for a broad retailer network across the country while August Home supplies the technology to take the final step into the home for a totally seamless experience, start to finish.”

Other early stage opportunities in the meal journey take a series of inflection points and bundle them into a single solution. Tovala, a Kickstarter-funded manufacturer of smart ovens, tackles the chore of meal prep and the hassle of buying/ordering groceries by selling prepackaged meals that are geared to work with their appliances. A frozen meal’s barcode is scanned into the Tovala and the oven takes care of the rest.

All of these developments take us back to the value proposition of convenience as it relates to the meal journey. Consumers want to save time and have the ingredients for tonight’s dinner (or the dinner itself) magically arrive at the door (even when they are not home) but at what cost.  And who bears that cost? And how much are today’s busy millennials willing to spend? In the ultra-competitive grocery world Albertson, Kroger, Whole Foods/Amazon, Sprouts, and others may be willing to absorb the cost of home delivery just to win market share. On the other hand, if you buy a meal kit or want a hot meal delivered to your door, the cost hits your pocketbook with a premium for the convenience. For consumers engaged in the ever-changing meal journey, the cost-convenience continuum is at its earliest stage. Like the halcyon days of premium channels on cable, subscribers loaded up on Showtime, HBO, Cinemax and a few others only to be hit with the budget–blowing cable bills. In a world where the click of a mouse or a few kind words to Alexa can bring Peking Duck to your front door, or your 10th week of a meal kit service, everything is fine and dandy until your credit card bill arrives.

Yes, life sure was convenient—but at what cost?

Kroger Gives Tech Initiative IoT Spin As Amazon Turns Up The Heat

Back in 2014, grocery store giant Kroger began to discuss its digital shelf technology, where they would replace traditional shelf labels with digital shelf labels to enable features such as dynamic pricing. Over time, this effort would expand to include personalized information for the shopper.

By late 2015, the digital shelf tech had rolled out from a few dozen stores to over two thousand nationwide and had begun to incorporate dynamic pricing and nutrition info.

Now the company is looking to power-up its digital shelf technology with IoT. According to a report from the Wall Street Journal, Kroger “is testing sensors and analytics technology to let shelves and products interact with shoppers walking the grocery aisles.” The new system would be able to detect individual shoppers and created targeted advertising using the electronic shelf display screens.

This new effort, which looks to employ location-sensing and authentication technology that at least sounds similar to what Amazon is talking about with Amazon Go, is currently in 14 stores in the company’s home market of Cincinnati.

Can grocery giants like Kroger employ IoT tech to make the shopping experience better? They better hope so. After all, it’s not like Amazon is slowing down its grocery ambitions. The Wall Street Journal reported in December that Amazon has plans that go beyond the smaller concept store unveiled in Seattle in late 2016.

As Allen Weiner wrote about the effort earlier this week, “Amazon will test two other concepts, including a drive-through version and a larger, expansive store to compete with Target and Wal Mart. Based on its tests, Amazon will move quickly into expansion mode with a full-scale, nationwide rollout. The initial batch of such IoT grocery stores will likely be based in states where Amazon has large fulfillment and warehouse centers.” The Journal reports Amazon could open up to 2,000 such stores under the planned rollout.

For grocery store companies, this move towards context-aware and IoT-powered shopping is nothing new. What is new is Amazon taking things next-level with Amazon Go, which uses IoT and AI to go beyond incremental changes and entirely rethink how grocery shopping should work.

And now, slowly but surely, established players like Kroger are trying to figure out what it means when the leading online retailer moves into their world of brick and mortar.