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Daily news and analysis about the food tech revolution

Ocado

Kroger “Soft Opens” First Ocado-Powered Automated Warehouse

Kroger has “soft opened” the first of its Ocado-powered automated Customer Fulfillment Centers in Monroe, Ohio, Kroger CEO Rodney McMullen said during an earnings call this week.

According to Dayton 24/7, the new facility is 335,000 square feet, costs $55 million and employs 400 people. The new warehouse will use totes on rails to help assemble orders for delivery, pickup and distribution.

The opening comes almost three years after Kroger announced it was upping its investment in and bringing Ocado’s automation technology here to the U.S. In that time, it selected a number of additional sites across the U.S. that will be home to more fulfillment centers.

Grocery e-commerce and the need for more robust fulfillment logistics has exploded over the past year, thanks to the pandemic. As such retailers of all stripes have been investing in more automation to accommodate online grocery shopping. Albertsons has expanded its use of robotic micro-fulfillment and started testing automated curbside pickup kiosks. And Walmart has partnered with three different technology provides to expand its use of automated order fulfillment.

As the Biden administration accelerates the availability of vaccines and the warm weather of spring and summer fast approaches, the question of how much consumer behavior has changed remains. While industry watchers expect there to be a short-term correction in the use of grocery e-commerce, there is a sense that after a year of lockdowns and social distancing, new habits have set in. Online grocery sales are projected to hit $250 billion and take up 21.5 percent of total grocery sales by 2025.

Kroger’s new Customer Fulfillment Center in Monroe is expected to have an official, grand opening launch soon.

Kroger Building Ocado-Powered Warehouse in Phoenix, AZ

Kroger announced on Friday that it will build out its next automated customer fulfillment center (CFC) in Phoenix, AZ. This marks Kroger’s first robot-powered warehouse in the U.S. Southwest region.

These CFCs use robotic technology from UK grocery Ocado (which Kroger is an investor in). Online orders are assembled automatically inside the center through a series of totes on rails, and packaged up for delivery.

Kroger announced a few years back that it would build out 20 such warehouses across the U.S., and has since started work on sites in a number of different locations including: Monroe, OH, Groveland, FL, Forest Park, GA, Dallas, TX, and Pleasant Prairie, WI, Frederick, MD, Romulus, MI, as well as the Pacific Northwest, Great Lakes and West Regions. The first Kroger CFC is expected to open in Monroe this year.

Ocado Robotic System For Kroger

Grocery e-commerce, which got a boost last year thanks to the pandemic, is expected to become the new normal for many shoppers. Online grocery is projected to grow over the coming years and take up 21.5 percent of overall grocery sales by 2025.

As such, grocery retailers are building out a variety of automated systems to keep up with that increased demand. While Kroger is building out these centralized delivery warehouses that serve large areas of customers, others are taking a more local approach. Albertsons built out micro-fulfillment centers in the backs of two of its Bay Area stores, and is expanding to more. And Texas grocery chain H-E-B is adding automated micro-fulfillment to a number of its locations.

Kroger’s CFCs are the opposite of “micro” fulfillment. The forthcoming Phoenix facility will be 200,000 sq. ft., and will open 24 months after groundbreaking to support customers across Arizona.

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.

Kroger to Build Out Ocado-Powered Automated Fulfillment Center in Romulus, MI

Grocery giant Kroger announced today that it will be building out its next Ocado-powered robotic fulfillment center in Romulus, MI.

Kroger is an investor in Ocado and uses the U.K.-based company’s technology to create automated fulfillment centers. These centers use a system of totes, rails and robots to assemble and expedite online grocery orders from a central location that are then sent out for delivery. Kroger is in the process of building out 20 of these facilities across the U.S.

In June, Kroger announced that the Great Lakes, Pacific Northwest and West would each get their own fulfillment center. The Romulus facility will service the Great Lakes region. Other locations announced include Frederick, MD, Monroe, OH, and Dallas, TX, among others.

Kroger’s ongoing automated march across the U.S. comes at a time when the pandemic and spurred record amounts of online grocery shopping. Though recent data suggest that the initial surge in online grocery shopping tapered off later in the summer, online grocery shopping sales are projected to hit $250 billion by 2025.

The first of Kroger’s automated warehouses aren’t scheduled to become operational until early 2021. That will give Kroger plenty of time to properly ramp up its own delivery operations amidst growing grocery e-commerce, but it also gives Kroger’s competition time to gain more marketshare. Amazon is expanding its grocery ambitions and offers Prime members free same-day delivery. Walmart just launched its own subscription service that offers free same-day grocery delivery as well. Even more regional players like H-E-B in Texas are getting into the automated grocery fulfillment game.

Kroger’s Romulus facility will be 135,000-square-foot, will create 250 new jobs and open up 18 months after the site breaks ground.

Kroger Building Next Ocado Automated Fulfillment Center in Frederick, MD

Looks like grocery shoppers on the west coast hoping for an automated warehouse to fulfill their grocery orders will have to wait a little bit longer. Kroger announced today that its next Ocadao-style robot-powered fulfillment center will be in Frederick, MD.

Kroger is building 20 of these smart warehouses, but none so far have made it out west. Other cities getting automated fulfillment centers include Monroe, OH, Groveland, FL, Forest Park, GA, Dallas, TX, and Pleasant Prairie, WI. Frederick appears to be the vague “mid-Atlantic” location the company had previously announced.

These automated fulfillment centers use robotic totes on rails to assemble online grocery orders. Kroger, which is an investor in Ocado, is taking more of a standalone approach to automated grocery fulfillment, building out entirely new, separate facilities. Other retailers such as Albertsons are building out automated micro-fulfillment centers in the back of existing retail locations.

Online grocery shopping is still a small percentage of overall grocery shopping, but its growing. Automated fulfillment centers like the ones Kroger is building have the potential to boost online grocery’s slice of the pie by offering faster turnaround of online orders (and thus, create more orders).

All these systems are just coming online over the coming months, so it remains to be seen how people will engage with them. Additionally, we’ll have to see if there is a difference in convenience and shopper adoption between standalone facilities and in-store ones (or some combination of both).

Kroger shoppers living in Baltimore, Washington D.C. and Philadelphia being served by the new Frederick facility won’t actually be that far ahead of the west coast. The new warehouse won’t open until 24 months after groundbreaking.

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 Looks to Build Next Robotic Warehouse in Dallas, Texas

Kroger wants to build its next Ocado-powered robotic smart warehouse in Dallas, TX. The plans aren’t finalized, and as the Dallas News reported:

The Cincinnati-based grocer will ask the Dallas City Council on Wednesday for $5.7 million: 10-year and five-year property and business personal property tax abatements totaling $3.7 million, and $2 million from 2012 bond money designated for economic development in southern Dallas, according to the city’s meeting agenda.

Kroger confirmed with the Dallas News that it is working with the Dallas city council on the approval process.

Kroger has plans to build 20 of these automated fulfillment centers, or “sheds” as the grocer calls them, and Dallas would be the fifth announced location, joining, Monroe, OH, Groveland, FL, Forest Park, GA and one unspecified in the Mid-Atlantic region.

These smart warehouses use technology from UK-based Ocado (in which Kroger is an investor) and combine robots and logistical software to automate fulfillment of online grocery orders. The automated system uses a series of totes on rails to shuttle around a grid system, picking up items and assembling them for orders.

Though the vast majority of Americans have still never bought their groceries online, the number of people who do is steadily growing, and retailers like Kroger are building out the infrastructure now for when it (eventually) becomes mainstream. Kroger, in particular is investing in an online ordering future, as my colleague, Jenn Marston wrote about Kroger’s Q1 earnings report in June:

[Kroger’s] digital sales grew 42 percent over the quarter, making delivery and/or pickup options available to 93 percent of Kroger’s customers. Online grocery delivery is now available at 2,126 Kroger locations and pickup at 1,685 locations. The company plans to have those options available to “everyone in America” by the end of this year…

But Kroger rivals aren’t sitting still. Walmart is testing robotic fulfillment, launching a grocery delivery subscription service and experimenting with in-home delivery. Albertsons and Ahold Delhaize are testing their own robotic fulfillment solutions, too. Given the competition, Kroger has to push its own innovation efforts. For example, just a few hours south of Dallas, down in Houston, Kroger is experimenting with self-driving delivery vehicles.

At some point, Kroger will connect the automated warehouses with the automated vehicles for round the clock delivery to get you the groceries you want when you want them.

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.

Kroger’s Q1 Earnings Call Highlights the Growth and Challenges of Supermarket Delivery

There was quite a bit of buzz this week around Kroger. Much of it came from the supermarket giant’s Q1 2029 earnings call, which took place yesterday. While fiscal results were somewhat mixed, right off the bat, Kroger chairman and CEO W. Rodney McMullen highlighted growth of what he called “an omnichannel platform to serve customers with anything, anytime, anywhere.”

In other words, right now is all about doubling down on delivery efforts for Kroger.

On the call, McMullen noted that digital sales grew 42 percent over the quarter, making delivery and/or pickup options available to 93 percent of Kroger’s customers. Online grocery delivery is now available at 2,126 Kroger locations and pickup at 1,685 locations. The company plans to have those options available to “everyone in America” by the end of this year, according to McMullen.

“Our customers don’t distinguish between an in-store and online experience. Rather they typically have a food-related need or a problem to solve and want the easiest, most seamless solution,” said McMullen.

Pieces of that solution include a growing list of companies Kroger partners with to not just expand shopping options for customers but also improve the logistics around doing so. To that end, Kroger has been leveraging a number of partnerships with companies over the last quarter, including Nuro, Microsoft, meal kit company Home Chef, Walgreens, and Ocado, with whom Kroger is piloting smart sheds that use robots to fulfill grocery orders.

The Kroger/Ocado partnership just broke ground on the first of 20 of these automated warehouses that the supermarket chain plans to open over the next couple years. McMullen said that this initial warehouse, located in the grocery store’s hometown of Cincinnati, OH, “introduced transformative format of e-commerce fulfillment and logistics technology in America. This in turn means Kroger customers will get fresher food faster than ever before.”

Speaking of faster than ever before: Kroger made good on that promise a few days before the call, when it started quietly testing 30-minute grocery delivery in Cincinnati via a new program called Kroger Rush. Users download a specific app, also called Kroger Rush, to order items and have them delivered. As The Spoon’s Chris Albrecht pointed out, that service seems to be aimed more at delivering last-minute lunch or dinner, though it’s not hard to imagine a point where Kroger might digitally replicate the “express lane” concept at brick-and-mortar stores, which speed up the checkout process for customers getting just a few last-minute items.

Kroger’s delivery-centric Q1 underscores something else Chris highlighted in his post from earlier this week: grocery retailers across the board are pushing the innovation envelope harder than ever as they compete with one another to deliver the fastest, most frictionless shopping experience to the customer. The race for the virtual grocery store aisle has really just begun.

Ocado Makes a Step Beyond Groceries With Two New Indoor Farming Ventures

Ocado has thus far made a name for itself in the world of online grocery delivery and fulfillment, but new moves see the company stepping out of the supermarket and into the farm — the indoor farm, to be exact.

One such move is Ocado’s announcement that it will partner with Dutch firm Priva and U.S.-based 80 Acres to create a new vertical farming company called Infinite Acres.

According to a press release, Infinite Acres will create a turn-key indoor farming solution meant to grow year-round produce close to densely populated urban areas. The idea is in keeping with many indoor and/or vertical farming initiatives out there now: get greens to the grocery store on the same day they’re harvested.

The company will design and install fully automated farms with custom LEDs, finely tuned climate controls, and other software tools that match clients’ specific needs around things like location and crop selection. Additionally, 80 Acres Farms will send its own growers to operate the farm, from managing the tech platform to harvesting the actual food.

80 Acres already offers an automated indoor farming platform to U.S. farmers, while Priva makes hardware and software tools aimed at better indoor climate control, water conservation, and energy savings.

Where UK-based Ocado comes in is with its tech know-how around things like predictive analytics, logistics, and automation. The company is known in the U.S. for its ongoing partnership with Kroger, with which it operates warehouses full of smart robots that can pack groceries and handle other food-related tasks.

In terms of involvement in vertical farming, Infinite Acres is just the start. Company CEO Tim Steiner noted in the press release that Ocado hopes to “co-locate vertical farms within or next to our Customer Fulfillment Centres and Ocado Zoom’s micro-fulfillment centres so that we can offer the very freshest and most sustainable produce that could be delivered to a customers’ kitchen within an hour of it being picked.”

No word yet on whether robots will be scurrying around those farms in future, though that wouldn’t be so surprising given the level of automation companies are trying to pack into indoor farms nowadays. Infinite Acres will join the likes of Liberty Produce and Australia’s VFS in trying to automate as many aspects of the indoor farm as possible.

Ocado also announced today it had purchased a majority stake in vertical farming company Jones Foods Co., and will use its tech to improve efficiency in the grow process and possibly even integrate the system with Ocado Zoom, for delivery. Jones Foods Co. is Europe’s largest operating vertical farm, with the capacity to grow 420 tons of leafy greens per year. Ocado’s investment in the company could mean Steiner’s aforementioned vision of co-locating vertical farms near Ocado fulfillment centers will become a reality in the near future.

Ocado Leads $9M Seed Round in Food Robotics Company, Karakuri

U.K. based online grocer Ocado announced today that it has acquired a minority stake in London-based food robotics company, Karakuri. Ocado’s investment led a $9.1 million seed round in Karakuri, which also included Hoxton Ventures, firstminute Capital and Taylor Brothers.

Karakuri makes two different food robots: The DK-One, a more industrial robot that can assemble (not cook) 48 ingredients into ready-to-go meals on a mass scale in commercial kitchens; and the Marley, which is a smaller scale machine meant for applications like candy stores and frozen yogurt dispensing and topping.

Ocado is no stranger to robots: the company uses them to power its smart, automated warehouses, where totes on rails bundle up grocery orders for delivery. With the minority stake in Karakuri, Ocado appears to be setting itself up to expand this robot-powered automation into other forms of food delivery. From Ocado’s press announcement:

The [DK-One] can be used in the assembly of all boxed meals, using a configurable, modular design which can easily be installed in-store or in “dark kitchens”, and can aggregate up to 48 food items to create a wide range of food-to-go options.

Dark kitchens (restaurants that are delivery only) in particular are an interesting avenue for Ocado/Karakuri. Not only could a dark kitchen automate order assembly quickly, but the restaurant could then subscribe to Ocado’s logistics and delivery service to manage and optimize getting those orders to customers. This would mean more revenue for Ocado and also more data, giving the company insight into what, when and where people are ordering different restaurant meals.

Ocado also said it would tie Karakuri’s robots into its existing grocery service, which makes me wonder they will be used for something akin to customized meal kits, or even prepared food that customers could shop for as part of their daily or weekly shopping.

As we saw at our ArticulATE conference last month, automation is invading almost every part of the food stack. Here in the U.S. companies like Takeoff, Alert Innovation and Common Sense Robotics are creating robot-powered micro-fulfillment centers for grocery stores to speed up online order processing. Kroger, which is an investor in Ocado, is building out Ocado-powered smart fulfillment centers here in the U.S. to speed up its own grocery fulfillment and delivery. Will that now include Karakuri robots?

Ocado said that it would take delivery of its first Karakuri robot in the second half of this year. For its part, Karakuri said it will use the new money to further develop its technology, “strengthen its IP base,” and expand its team.

Kroger Selects Groveland, Fla. for its Next Robotic Warehouse

Florida is becoming a hotbed for grocery robots as Kroger announced yesterday that it has selected Groveland, Fla. as the location for its second automated warehouse using Ocado’s technology.

These smart warehouses use a series of crate robots on rails that zip around assembling items to speed up the fulfillment of grocery orders. Kroger has plans to build out 20 such robot warehouses, with the first being built in Monroe, OH, just outside Kroger’s hometown of Cincinnati. In addition to Monroe and Groveland, Kroger has announced a third automated warehouse will be built somewhere in the Mid-Atlantic region.

But Groveland isn’t the only place in Florida where groceries are going robotic. Further south, down in Miami, Takeoff launched its first robotic grocery fulfillment center for the Sedano’s supermarket chain last year. Sedano’s has locations in Orlando, and should the Takeoff partnership expand, it would set up a bit of a grocery robot battle royale, as Groveland is only 45 minutes away from Orlando.

Automated warehouses are just one part of a big investment Kroger is making in logistics and fulfillment. The Cincinnati shed alone is costing the grocery giant $55 million to build, and as noted earlier, Kroger has plans for 20 of them. Additionally, Kroger has been testing self-driving delivery vehicles in Scottsdale, AZ and recently expanded those tests to Houston, TX.

It’s not hard to connect the dots between a Kroger robot fulfillment center packing your grocery orders and loading them into a Kroger autonomous vehicle that brings them to your door. That’s still a ways off, but Kroger is laying the groundwork for it all right now.

Automation throughout the grocery chain is something we’ll be discussing at our upcoming ArticulATE food robot summit in San Francisco on April 16th. We’ll have speakers from Albertsons, Robomart and more talking about all the big issues around robots at grocery retail and how they will transform the shopping experience. Tickets are limited, get yours today!