With 140 years in business, Cincinnati-based Kroger has accelerated its push into virtual retail during the pandemic, and the supermarket chain is rarely left behind.
Kroger has pursued an omnichannel strategy, integrating offline or in-store sales with logistics and online ordering. one hundred high-tech supermarkets with the Freshippo brand in 27 Chinese cities.
This style of “New Retail” “cut and paste corporations working in China,” said Michael Zakkour, founder of retail and e-commerce consulting firm Five New Digital in New York City. “We’re seeing it with Kroger, Target and Walmart. They looked at the new China-born retail style for the full integration of offline and online channels,” he said. Same-day delivery, in-store restaurants, app-based sales, and QR codes are all positives. them, and it all happened first in China. “
Initially, highly competitive and fragmented U. S. food retailing was not a major contributor. The U. S. was slow to gain ground. But the action came when Amazon bought Whole Foods Market in 2017 and began introducing several complex technologies to streamline in-store shopping, an update that has also been extended to major Walmart stores. and objective.
“You just can’t be a 1990s grocer. You have to be brave, break things and adapt quickly,” said Yael Cosset, senior vice president and chief data officer at Kroger, which leads its generation and virtual initiatives. Alibaba said the Chinese e-commerce company “has done a task of reinventing the retail model, a brick-and-mortar convergence with e-commerce in an online and offline world. “
Cosset spearheaded the advent of the omnichannel grocery shopping experience. Kroger’s new retail business connects shopping, e-commerce and logistics: automated distribution centers, grocery bags; vans make same-day deliveries to homes; Data research provides early reading of visitor trends; cell programs distribute promotions and coupons to visitors; on-site “ghost kitchens” prepare food for pickup at the store or delivered to a van; QR codes take care of invoices online at checkouts; And giant distribution centers and online warehouses rely on robots to pack, sort and load orders.
New automated distribution centers are one component of the technology effort. These centers use AI and robotics to upgrade laborious sorting and bagging groceries for delivery, while on-site processors manage operations such as engineering and stock management.
“When you take a look at retail, there are two big enablers: knowledge generation and science, and secondly, logistics and supply chain execution,” Zakkour said. “The lesson U. S. stores are learningRetail and e-commerce are seamlessly integrated. “
Zakkour credited Kroger for being one of the most progressive stores in the U. S. The U. S. government is implementing this omnichannel approach. Competitors Walmart and Target are spending heavily, even in a slowing economy, and with generation amid existing capital investments.
“A company that doesn’t generate laser beams like Kroger is vulnerable,” said Jim Russell, director of the Bahl investment corporation.
Digital supermarkets have outpaced Covid, with consumers prioritizing e-commerce, at-home food, and prepared foods. Kroger’s virtual business reached more than $10 billion in 2020 and has grown 113% over the past two years. Building on this momentum, Kroger aims to double its virtual profits by the end of 2023. Kroger’s virtual sales grew 8% in the current quarter of 2022, while combined in-store and online sales grew 5. 8% year-over-year.
Supermarkets lagged behind other e-commerce sectors with 3-4% of total sales, but tripled the pandemic, according to McKinsey, which predicts that e-commerce will account for 18% of supermarket sales in the next three to five years.
“Now we’re figuring out how well this virtual shift is working at Kroger,” Russell said. He noted that “part of Kroger’s app retail outlets generate more business and the other part cannibalizes in-store sales. “The company’s overall sales increased. 4. 1% in 2021 to $137. 9 billion, and Kroger expects a gain in diversity of 4% to 4. 5% by 2022.
As part of a Kroger Restock initiative introduced five years ago, the grocer combined physical and virtual experiences, a strategy that required primary and long-term investments in robotics and supply chain management, as well as knowledge analysis to perceive and expect visitor habits. and personalize marketing.
“We leverage knowledge to engage with consumers through virtual channels like apps and online page attachments to make visitor interactions applicable and bring unannounced grocery purchase reports to life,” Cosset said. He noted that retail branches may lose the non-public link to consumers offered by a local store. But through knowledge and technology, Kroger can bond more with consumers and not run classified ads and promotions online.
Cosset joined Kroger in 2015 when the supermarket chain acquired the U. S. assets of its partner, London-based knowledge science firm Dunnhumby, where he held leadership positions.
One investment that proved central to the new strategy was a 5% stake in British grocery e-commerce company Ocado Group, which Kroger ended in 2018 and which Kroger partnered with to bring its home delivery platform to the United States. Kroger opened its first 3 Ocado-run Centers near Cincinnati, Atlanta and Orlando in 2021, and this year added Dallas and Wisconsin. Several other places are planned. These giant hubs can handle thousands of online orders daily, and smaller services at satellite locations make certain last-mile deliveries from delivery vans that can process 20 orders at a time.
“The grocery store in the U. S. U. S. It has traditionally lagged behind the UK, France and Germany,” said Hilding Anderson, head of retail strategy for North America at Publicis Sapient. catch up with retail trends. “