The news came to Tampa Bay on billboards, in mailboxes, and through radio and television advertisements: Residents can now get groceries from the well-known Cincinnati-based, 138-year-old grocery store Kroger.
But how exactly can customers have their bacon, broccoli and baby food delivered by a chain that does not have its own stores here?
This month Kroger made an e-commerce foray into Florida with a 375,000 square foot Customer Fulfillment Center in Groveland, a town in Lake County west of Orlando. This high-tech facility serves as the basis for deliveries in Tampa and St. Petersburg, Orlando and Jacksonville.
Credit for the pandemic that rocketed online grocery shopping in the Sunshine State, which Kroger appears ready to bet on.
Most importantly, America’s largest grocery chain with traditional retail stores isn’t competing against Florida’s undisputed King Publix.
“We’re really focused on e-commerce and delivery services right now,” said Andrea Colby, Kroger’s e-commerce corporate affairs and communications manager.
And what’s going on in that warehouse – a highly automated system of thousands of busy robots darting around to satisfy customer requests – is being closely watched by the industry, especially after the pandemic.
“It will be really fascinating to see how well Kroger can break into this market with just one online delivery approach,” said Gary Hawkins, CEO of the Center for Advancing Retail & Technology.
This is how it works: A customer orders on Kroger.com or in the store’s app for delivery the next day. Regular groceries, fresh groceries, adult drinksso and toiletries are available. Shipping is $ 9.95, no tip required.
In the center of Groveland, a system developed by the British e-commerce technology company Ocado Group is fulfilling the contract with rectangular robots on 3D grids that are “orchestrated by proprietary air traffic control systems”, according to a press release. The Groveland facility also employs 400 people.
“I would say Kroger leads the industry in innovation in the fulfillment center, there is no doubt about it, purely from a purely dollar and time investment,” said Mark Thompson of GroceryAnchored.com.
Orders are transported in articulated trucks to “spoke” facilities in Tampa and Jacksonville. (Orlando is close enough to be served by the Groveland Center.) Tampa’s Spoke is located on an industrial park between US 301 and the Lee Roy Selmon Expressway and employs approximately 180 people. There the products are loaded into vans and delivered.
Grocery retailers had been looking at delivery options long before the pandemic. But the craze for ordering food accelerated in a pandemic that made people suspicious of going into stores.
“We saw online grocery stores explode,” said Hawkins.
Online shopping, which used to make up one to three percent of sales, has grown to as much as 10 percent, Hawkins said. As the world slowly opened up again and more people started shopping live again, e-commerce declined a bit but was still “way above what it was before the pandemic,” he said.
And now that people are more comfortable with the food delivery, it is expected to grow, Hawkins said.
“The general consensus is that we as an industry will likely be doing 20 to 25 percent of total sales online over the next four or five years,” he said. The trend could be towards cross-shopping or “omnichanneling” – customers have some items such as bulky diapers or dog food delivered to their home, but go to stores to choose their own products.
Maybe Kroger is betting on that too – as Florida visitors who feel comfortable with their name from their homeland.
While Kroger “certainly invests, that’s a lot less than it would cost them to build six or eight or ten brand new stores,” said Hawkins.
Publix was not available for comment on this story.
“It’s going to be really interesting to see how this plays out down there,” said Hawkins.