#NRF2019: Ocado helping online grocery develop apace in US

Ocado’s partnership with US supermarket Kroger will enable the supermarket to improve its home delivery service and give it the capability to offer the service to 100% of the US population that are increasingly hungry for online grocery shopping.

Speaking at NRF 2019, Brett Bonner, VP of research and development at Kroger, acknowledged that in order to offer the best service to its customers it has to undertake partnerships – such as that with Ocado. This has become more urgent as significant growth is expected within the online grocery category.

“Customers now want to order anytime, anywhere and get great service and this involves partnering in order to give shoppers a seamless experience. Ocado has great engineering. What I’ve seen is world class. Penetration of online grocery is 2% in the US and in the UK it is 8%, with over half of all consumers in UK using online grocery at some point. Consumers everywhere want to interact more online,” says Bonner.

David Hardiman-Evans, senior VP of North America at Ocado, says Kroger can expect “better execution” from working with Ocado as the company has built out its solution to solve the issues that customers complain about when shopping online for groceries - out-of-stocks, inappropriate substitution, limited range and late delivery.

He also dispels the myth that the UK has a higher penetration for home delivered groceries because it has people living in greater densities compared with the US: “There are plenty of cities in the US and lots of urban sprawl. Lots of people live in areas that could be delivered to. Even in the UK there are some remote areas that we choose not to cover and in the US Kroger will determine where its deliveries go.”

But it is not just about home delivery where online grocery is growing because a big growth area involves click & collect. In 2016 only 4.3% of grocery buyers in the US used click & collect whereas this had grown to 8.9% in 2017 and was as much as 14.9% in 2018. Bonner says: “Pick up in-store will be the most used method for online groceries. It will dominate for at least the next five years.”

To help with the in-store picking of goods for these orders Bonner says its electronic shelf edge signage solution Kroger Edge will flash as the picker approaches the next relevant item for the basket they are compiling. This has led to a 50% improvement in pick times in-store.

Both Kroger and Ocado are experimenting with autonomous vehicles for the delivery of food orders as they agree it will affect the industry in the future. Harriman-Evans says: “Whether it is the last mile or the last 10 metres it will look different in the future.”

But he does have some reservations about autonomous vehicles’ role. “We’ve some pilots running and fundamentally we’ve got to consider the tasks we are trying to solve. It’s got to be better than yesterday. It has to improve the customer proposition or reduce costs. With autonomous vehicles there is no person to take the groceries into the kitchen so would they therefore actually make the service worse?”