With the Kroger-Albertsons merger being the largest merger in U.S. history to be blocked by various forces, Kroger Company invests in technology advancements.
Merger - to be or not to be?
In 2023 the International Brotherhood of Teamsters stated that workers at an automated warehouse owned by the grocery store chain in the Detroit area had cast polls to become members of the union, making it the first fulfillment center to do so. By a vote of 3 to 1, the 289 drivers at the e-commerce facility who took part in the election chose to become members of Teamsters Local 337.
The employees' choice to become Teamsters members coincides with Kroger's attempts to secure permission for its contentious proposal to merge with Albertsons, which the union has stated it opposes. The labor union, which represents around 22,000 workers at supermarket giants' shops, distribution hubs, and manufacturing facilities, said in June of last year that it had chosen to reject the merger following talks with the businesses in order "to protect the most basic interests" of workers.
When Kroger and Albertsons released the extensive official list of locations that C&S would acquire if the merger were approved by the Federal Trade Commission in mid-July, they offered some answers. However, this possibility started to fade when the FTC sued to block the deal in March 2024, claiming it anti-competitive. As a result of their commitment to sell off more than 500 stores nationwide, the supermarkets are undoubtedly hoping for government clearance.
Progressive Grocer revealed that Colorado Attorney General Phil Weiser sued the Denver District Court in February to stop the merger. Ultimately, Kroger's attempts to get the complaint dismissed failed, and on August 12, arguments in the Colorado lawsuit will start.
In the meantime...
The previous two years have seen a mixed performance in grocery delivery as the COVID-19 pandemic-induced spike has worn off. Digital grocery sales increased 8% YoY in June, according to research company Brick Meets Click, but the first five months of the year saw inconsistent success.
With that in consideration, Kroger has been concentrating on changing the composition of its network to bolster its delivery approach. To assist the grocery store increase its competitive advantage in the expanding e-commerce sector, Kroger and Ocado announced in 2018 that they had an exclusive partnership to bring the automated fulfillment capabilities of the British e-grocer to the United States. By the end of 2022, Kroger and Ocado agreed to open 11 CFCs; however, as of right now, eight have opened, with three more on the horizon.
In the meantime, Ocado released an On-Grid Robotic Pick - a robotic arm mounted on the automated fulfillment grid that packs bags with goods placed by other bots using the grid. Ocado's robotic arm technology can choose tens of thousands of goods and put them into bags with "precision and accuracy" because of its superior machine vision, reinforcement learning, and sensing capabilities.
Ocado has already extended this feature to distribution networks outside of the United States, stating that the On-Grid Robotic Pick can pick more than 70% of a vast online grocery selection when operating at maximum capacity.
Since Ocado's New Frameload technology automates the physically demanding process of putting prepared client orders into delivery frames, there is no need for personnel.
And what about the near future?
Unsurprisingly, Kroger announced pausing the rollout of further automated fulfillment centers while assessing the effectiveness of its current locations, in addition to shutting three e-commerce facilities during Q1.
“Through the power of machine learning and AI, we are developing new ways to elevate the Pickup experience for customers and at the same time reduce costs,” McMullen said on the Q1 earnings call. “With dynamic batching of orders, these tools are providing associates the most effective pick routes, which is enabling us to dramatically reduce pick lead time in our highest volume stores.”