Sounds like they just put them in the wrong places.
> Fenyo added that Kroger’s decision to locate the Ocado centers outside of cities turned out to be a key flaw.
> “Ultimately those were hard places to make this model work,” said Fenyo. “You didn’t have enough people ordering, and you had a fair amount of distance to drive to get the orders to them. And so ultimately, these large centers were just not processing enough orders to pay for all that technology investment you had to make.”
But I think in the cities Kroger grocery stores serve as the fulfilment centers, so they don't need robotic ones.
There's probably still room for automation, but it might have to be different than warehouse automation.
It depends on your business model.
If a basket of groceries brought online costs $15 more than the in-store prices, then you can pick in-store profitably, very easy. That's the instacart model.
But if a basket of groceries brought online costs about the same as buying in-store? With the retailer bearing the costs of picking, packing and delivery instead of the customer?
Well then you need something more efficient than a store.
Even $15 more isn’t enough on account of delivery time, transpo costs, driver time, picking items, and bagging. Current model is for drivers to subsidize by being tricked into taking unprofitable orders.
If Kroger operates the same was as Ocado does in the UK, then the drivers are paid by the hour, with the company providing the van and fuel.
Agree a lot of modern delivery businesses involve "self-employed" drivers getting paid a pittance and using their own vehicle and fuel, though.
From what I've seen, for grocery the model is they'll give you the least desirable or near expired stock that the walk-in customers won't grab. So they're basically saving spoilage. This happens so reliably I'm absolutely convinced this is how they 'pay' for it without raising prices.
I've also noticed this with hardware stores like Lowes. If I place a pickup order they more often than not will pawn off on me their broken, returned, or even used and damaged stock. Items like building wrap will have soil and rips on it, concrete mix will be spoiled from moisture, lumber will be all the most warped pieces (if you don't order a whole pallet, expect every last piece of fractional pallet will be knotted to hell, split, twisted, and badly warped), plumbing valves will be open package and leaky, etc etc. It's like clockwork, even if the stock sitting on the shelf doesn't have these problems. Due to this there are some stores I will never do a pickup/delivery order from.
Here in the UK it's common for online grocery sites to say "fresh for at least X days" on every item, so bread will usually say 5 days, eggs 7 days etc etc. Doesn't matter if I select collection(so someone is picking those items for me at the store) or delivery(so they come from a larger warehouse). They stick to that promise.
And how about charging more in store than online?
On two separate occasions, I stopped by Walmart recently and spent $0.50 extra and $1.50 extra by walking in, going to the aisle, and picking up the item myself.
The Walmart app even tells you that the price on the app is only for online orders. But I didn’t want to wait for an unknown amount of time for a Walmart employee to bring it out to my car (been more than 10 to 15min a few times).
So basically, I pay extra to avoid that volatility in time to run that errand, and I do more work for it.
I'm not sure they want us in the store anymore.
And I'm glad to stay outside.
Using a retail store for fulfillment means orders are accepted for items that are out of stock. the ordering system doesn't have reliable inventory info. Then the customer gets a partial shipment. This is the curse of Safeway grocery ordering.
Kroger placed one of the sites in Orlando to also service Tampa and Jacksonville when they have 0 regular stores in the entire state. They were trying to use it to expand into the area, but I never saw very much in terms of advertising or promotions to drive demand but it could have also been that the robots were so bad that they couldn't attempt to market and push volume.
They literally went too far…
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“Never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway”
In the AI analogy, never underestimate the productivity of a human when dealing with a giant pile of groceries. You can throw all the AI and robots you can at something but sometimes a $20 an hour human picking from stacks of goods and produce simply destroys it in raw economics
That’s not really what the article implies, at all.
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I've always said that in the back of my mind, the most successful grocery store would be the 'walls' of the store -- bakery, deli, produce, meats, floral, cheeses, dairy and having a little selection of store brands in the middle where consumers can pick up (and vendors can pay a premium for endcap space, because they're the only non-branded products out there), with the rest of the SKU's behind the walls of the grocery store in a fulfillment only model.
Kroger should have pulled a Wal-Mart and turned to their shrink-heavy stores in urban centers to online fulfillment only -- basically only their delivery drivers can retrieve items for an order, and everything's shopped by an associate (Look south of the MicroCenter in Dallas if you want to see what one looks like: it still has the Murphy USA in the parking lot and is basically an unbranded walmart building with 'driver' and 'associate' entrances -- and then deployed the robotics there: less retail space, more online/fulfillment capacity (have humans grab produce and custom sliced/packed items, robots pick the dry goods), and while you lose some cashier jobs, you'll probably have net improvement in terms of time waiting to be picked.
So what grocery stores used to be ~90 years ago, when the norm was you would give the clerk a list and they would grab your items from the back? The only stores I'm still aware of that are setup like this are auto parts stores, where 90% of the inventory is in the back.
Only other places I can think of is weed dispensaries and pharmacies.
You could also count shoe stores and high-end jewelry and watch stores in that the clerk has to go in the back to fetch the non-display model.
I had a wonderful retro futuristic dream about an automated Costco warehouse a few weeks ago. It was one of the less weird dreams so I still remember it clearly.
Basically, each section is like a closed areas with some windows. Customers order at the computers by the windows and flash their membership cards. Robots glide left and right to move 10 samples to the customer, in an arm with rotating clips. Customers can press a button to rotate the samples, observe them, and place an order by pressing a button. Samples not chosen are temporarily stocked at the window as a “stack”.
In each closed section, there are humans who monitors and maintains the robots, and occasionally fetch samples when robots stop working (hopefully it too often, you know those 9s).
At the exit, a human worker assembles the packages and hand them to the customers with a smile. Customers have a last chance to return unwanted items.
Why was it a retro futuristic dream? Because the customers have the option to go into a bakery to enjoy a cup of coffee/tea, some cake and socialize with fellow customers. All of them looked like the men and women from advertisement from Fallout 4.
I’d like to shop or even help build one of these.
What you've re-invented is Keydoozle, from 1937.[1] This was the first automated grocery store. Three stores were opened, but there were enough mechanical problems that it didn't work well.
Incredible, they were 75 years ahead of their time.
Sounds like the old general store model, you didn’t browse yourself, the shop keep would bring out what you wanted, it was always behind the counter. I experienced this in China when I started visiting in 1999/early 2000s, it’s mostly not like that anymore though. You still have department stores where you need to buy things first before touching them, though.
Basically a catalogue store without shipping to your door.
Oh Service Merchandise was a thing in the USA also, where I was living at in Mississippi at least. It was basically catalog focused store with a showroom.
IKEA is kind of like that also, but you have to get everything yourself after picking it out upstairs. And Sears might have been like this at some point before I was born.
Little bit more specialized, but Lee Valley Tools [https://www.leevalley.com/en-ca] stores seem to still operate this way. Showroom (and a few computer kiosks) and order forms up front, then line up for them to pull the items from the back.
Argos in the UK was similar. You would go into the store and look up the product in a catalog. Then go to counter and order it, wait 2-5 minutes and they give you the product. I found it quite convenient.
They still exist. Tend to be pretty competitive on price, although they must be losing out to online shopping in a lot of places since they don't offer any showroom advantage.
Reading the history of Consumers (thanks, I never knew this existed):
>In the 1990s, Consumers Distributing struggled to compete with Zellers and then Walmart Canada. Consumers Distributing sought bankruptcy protection in 1996.
And Zellers went under just a few years ago...
I had hair when Zellers went under
Sorry to say but 2013 was more than a few years ago...
You'll obviously buy fewer things that way, and I can't see that making business sense.
Yeah, that could be true. I'm not sure how many people are similar to me, who are allergic to "window shopping" and just want to buy, pay and exit. My Costco session is less than 30 minutes (from parking to back to car) in average.
I do research price, though, so if they show a big DISCOUNT sign and is more or less honest with it, I'll probably grab some, too.
Sounds like a lot of waiting around, versus just browsing the aisles. Maybe today’s consumers need to rediscover cash-and-carry, though.
In the dream customers just walk around and make orders. It’s actually old style I think, but with robots. Yeah it’s a bit like cash and carry, but customers didn’t move into the sections. They just get to browse the samples robots carried to them.
TBH, now that I think about it, the dream was way more vague than what I described in the reply. My brain probably reasoned about the idea subconsciously.
The only exception in warehouse was the cafeteria. I guess my brain wanted to make something retro futuristic so it made the cafeteria “retro” — manned by humans and cooked by humans too. There were even balloons inside now that I recall…
You've reinvented the Soviet grocery store, but with robots instead of people and with a $7 cup of coffee.
I remember those stores as I came from a similar background. One vital difference is that they all have workers who have a straight face and don’t give it a fuck about customer service.
Then in the 90s they were all washed away by the new ones.
You’ve just described B&H in New York City.
Now I'm picturing Hasidic robots.
Being pushed about on trolleys and puppeteered by gentiles every Shabbat?
Or their online groceries didnt succeed because people can p4ice shop. I am of the belief Kroger does well because they obfuscate their prices and their tags which make it seems like they are sales truely are not.
Unlike Publix if I see a discount I know it is a discount. Every other item in Kroger has a yellow tag and a red price to make you think you are getting a deal when in fact the red number is higher than regular price at normal stores.
> Or their online groceries didnt succeed because people can p4ice shop.
Ocado does just fine though, and are rarely the cheapest choice.
This is a failure of business model and logistics, not a failure of the robotics.
> Fenyo added that Kroger’s decision to locate the Ocado centers outside of cities turned out to be a key flaw.
They over-spent on automating low-volume FCs. You could draw comparisons to Amdahl's law, they optimised the bit that wasn't the issue, the real issue was delivery distances and times.
Ocado has had good success with the robotics approach in the UK, because the UK is very high density compared to a lot of the US. Plus Ocado put a lot of work into creating good delivery routes, whereas it sounds like that wasn't a component of the automation stack that Kroger bought.
I think we are mixing up two things here.
Robotics for picking and the general feasibility of grocery delivery in the US.
Ocado is good because their stock levels are far more accurate than the other supermarkets for online ordering, so you don't get as many substituted/missing items. This is sort of a side effect of having dedicated picking facilities Vs "real" supermarkets. I would not be surprised if they "lose" less stock as well compared to in supermarket fulfillment.
Then you have "is online grocery good in the US"? There's a lot of areas of the US that have reasonable density for this kind of service imo, and the road infrastructure is generally far superior to the UK which negates any loss of density (as you care about time between deliveries, not distance per se). I imagine the much better parking options in most suburbs in the US also helps efficiency (it's an absolute nightmare for a lot of the online delivery cos when there isn't off street parking in the UK and they have to park pretty far from the drop).
It sounds to me that Kroger just messed up the execution of this in terms of "marketing" more than anything.
> failure of business model and logistics
Just the model. They optimized for tax outcomes. They obviously wanted in on the "Amazon race to the bottom" game.
> the real issue was delivery distances and times.
Which they could care less about. Where else are you going to go?
Here in the Houston areas, supermarkets like Kroger/Walmart/HEB/etc always have single floor buildings. Why can't they build multi-floor buildings for storage upstairs and retail walk-in sales on the ground floor? On the above ground floors, they can create an automated or semi-automated system for employees to gather up items for online/delivery orders.
Probably because you then need pillars throughout the entire building to support the second floor which you are loading down with a ton of weight. The average forklift weighs 3x or more the weight of the average car, and then adding racking and stock on top of that. Yeah if you completely redesign your storage system to not require forklifts you save weight there, but you end up adding the weight back with all the heavy duty track systems and extra heavy duty racks that are required to eliminate the forklifts. Plus there is liability of having that weight up top, a rack failure on a second floor could take down half the building.
It is possible, but you end up spending 10x as much on the building.
Then put the warehouse on the first floor and put the store on top.
Lots of big cities have grocery stores with parking garages under them, doesn’t seem much different.
The difference is the 100x the cost to build it and the completely different amounts of foot traffic and margins available in dense city centers. Nobody is going to build such a store if their return on investment is expected 50-100 years down the road.
Inner city high rise construction is entirely different from tip-up and bolt together single-story box stores in the suburbs.
Good construction is not cheap and takes many quarters. Land outside the urban area is far too cheap and probably subsidized (directly or with free oversized infrastructure) because local government always wants jobs, even small numbers of shitty jobs.
I thought about this a lot with parking spaces, nobody like big, open, tree-less parking lots. Why not just build them up adjacent to the grocery store.
The answer is $. It costs too much and land is cheaper than building up (In most places).
All recent HEBs have dedicated grocery pickup staging space. I chatted with a staffer once. It is like its own little grocery store where they keep selections of hot, cold and room temperature bags of selected groceries temperature controlled until the orderer comes and they put them together and bring them out.
The ones in Bellaire and Meyerland are two level with parking (aka flooding space) below the store and a smaller parking lot on the second level with the store. Bellaire also has a fancy fuel cell setup for some reason. The single level HEB in Montrose(ish) was built into the site of an old complex of charming but nearly abandoned standalone quad/duplexes with many mature oaks. They seem to have retained nearly all of the trees on the grounds in greenspaces within the parking lot and entryway.
Here's some street view of Montrose. They also had a bike air and repair system when it opened. I'm not certain if it stayed in good repair itself. https://maps.app.goo.gl/KxHAvDqKca4E8L8a7
I would guess that having everything on one floor optimizes the unloading, restocking and logistics. Also construction is cheaper.
The vast majority of the inventory is already on the sales floor.
Also, the backstock is minimal. Stores are designed for turnaround.
Glad someone made this point. I'm curious how long people think most items in a grocery store last? Just consider the trucks you see stocking them on a daily basis. Typically it is bread and other high flow consumables, no?
Right. Not selling things fast enough is a bigger problem than not having enough storage for unsold stock.
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I sometime use Ocado in the UK, and it's 'OK' but it's certainly not at the cheap end of the market.
I more often use a traditional supermarkets home delivery service where it's manually picked; those supermarkets have the advantage of having very little infrastructure overhead in the picking - they mostly use their existing stores and pick at quiet times/over night. Ocado has to run entire warehouses just for this task.
Ocado can only work with packed goods - not weighed vegetables for example - which the hand pickers in store can do, albeit whether they do it well is down to luck and the mood of the picker.
Weird headline, totally unsupported by the article.
According to the article, there were several strategic blunders, including trying the model outside of cities where lack of density cut against it. Plus the apparent dismissal any value their 2700 retail locations could provide.
As far as I can tell, Kroger didn’t acknowledge anything except a change in strategy.
Doesn't that support the article? their bet was massive robotics in centralized warehouses, but that turns out not to be profitable.
Unsure how the headlines doesn't align. Maybe it's different than what I'm seeing:
> Kroger acknowledges that its bet on robotics went too far
Good news for blue collar workers, tough for investors. The bean-counting dream of LLM's and Robotics remains, but until ChatGPT is placing your order at Mcdonalds drive-thrus and Amazon is laying off warehouse associates en masse, i'd say that last 5% is still taking 95% of the time.
McDonald’s is an interesting example because they’re increasingly replacing cashiers with kiosks. Robotics/LLMs seem to have diminishing returns compared to that in the order taking realm.
I love it when people invent things to force everyone perform self service and call it 'progress'.
I like it, I order on my phone before I get to the place and just pick it up.
Any reason to like the old way is just nostalgia in my head.
I usually see people preferring to use the self service in McDonalds or supermarkets when given the option of either, so the consumer must find some benefit to it.
I always choose self service because that's where the volume is. I can wait in one of any Costco lines with 4 carts and 1 person checking them through, or I can wait in the line with 4 carts and 6 self service checkouts.
Despite the math working out insanely well for self service checkout, sometimes the gamble still doesn't pay off and the single employee burns through 4 carts faster than 6 self service checkout kiosks.
Costco does pretty good here though, drug stores go slow as hell.
Yeah the introduction of the kiosks is what tipped the scale and stopped me going to McDonalds. And I used to eat there a couple of times a week at least.
Sure, but not the kitchen staff, which is where the robotics dream is supposed to take you.
I watched a show over 20 years ago that showed a fully automated robotic kitchen at McDonalds. I can only assumed they have continued to evolved it and perfect it as the technology has improved. I think it’s simply a question of when it hits the tipping point on cost.
There may also be an issue with logistics when it comes to making sure the machines keep running if there is a problem. They can barely keep the ice cream machines running.
I imagine kitchen robots are harder than they might sound. Kitchens are rough environments for machines. They are hot, greasy, and steamy. And everything that comes in contact with food needs to be able to be taken apart, washed, and sanitized at least daily.
True, that’s a good example of the commenter’s “last 5% is the 95%”
McDonald’s is also pushing their app pretty hard with lots of incentives.
I hate those stupid things so much. They're really, as far as I can tell, just moving all labor to the kitchen and drive-thru, while considering the dining area an afterthought.
Maybe they're just following the trends their own numbers tell them are happening, but I don't think they trust robotics enough to put an area they truly care about under its purview just yet.
Even 30 years ago more than half the sales at a McDonalds were in the drive through. Some new McDonalds don’t have much of an inside dining room at all anymore, while having multiple drive through lanes.
I don't know what they are thinking, the kiosks are not cheap to install or maintain, they are buggy, and they've put me off from going into McDs anymore. The In-N-Out nearby is cheaper, friendlier with plenty of employees working, (and better quality), so not sure what McD's end game is here.
I don’t like them either. The UX is annoying and it’s way too large. The benefit is that I get to see more options than can fit on the screens and they have photos, but still in person just seems better.
But I’ve read they’re effective, apparently, in consistently upselling compared to a human, so I’m guessing that’s their play.
Taco Bell by us has AI order taking and it is amazing. Quick, always has been getting it correct, and easy to understand. Granted, it's probably very abusable, but for someone just wanting to put in a quick order it is way better than a person.
Whenn I lived in Atlanta the Krogers each had a nickname. There was disco Kroger because of its disco ball. There was murder Kroger that purportedly had been the site of a murder.
This I guess is Robo Kroger.
In Charlottesville all the Krogers are quite different.
A weird, dark, maze-like warehouse-feeling Kroger that just closed.
We have a really nice Kroger a bit outside town. I always think of it as the Gucci Kroger.
A college-kid, cheaper Kroger close to the center of town. The cheaper version of the Harris Teeter nearby.
There's as much variation in individual Krogers as between other grocery chains!
I like to imagine that whenn is like iff -- ie, when would mean "when and only when", lol
A common practice in Denver. Kroger's local brand is "King Soopers". There's Scary Soopers, Queen Soopers, and ironically El Safeway and Soviet Safeway.
3 CFCs (robotics centers) closed, 5 continuing operating [1]. Initial commitment was 20 & Kroger is paying 350m$ to compensate the partner.
I don't know what success looks like but it's probably fair to say they were over-extended by roughly 30-40%.
I remember a glowing video about this thing (by Tom Scott maybe?) and being confused how it could ever compete with humans being paid slave wages.
Guess I was right.
It looks like they got the robots together but forgot the groceries.
all it takes is one junior executive gets caught by one chinese robot saleswoman, and the next thing you know…
TIL Ocado is supposed to be an automation/robotics co.
I associate it more with delivery vans that seem to be in no particular hurry (unlike uber eats / DPD / UPS etc)
it's just a wheeled bot that's driven by a joystick by some offshore person /s
Notable that the reasons for failure to meet benchmarks was that the locations were too far away, and that they are moving to the “Micro-Fulfillment Center” approach that Amazon is doing at Whole Foods. This is exactly what everyone predicted when Amazon bought WF - turn it into a grocery FC.
That makes sense to me.
Feels like we’re going to have warehouse scale vending machines in cities, and delivery bots taking them from the warehouse-vending-machine to the customer.
I like being able to see the thing I'm going to get and holding it in my hand.
I like not going to the store more.
Because tips are important to the income of delivery shoppers, I find that I generally get good produce selections. It might be difficult to transition that particular incentive to robots, but the point is that delivery items don't have to suck.
The only thing I really still pick out by hand every time are beef briskets. Pork shoulders tend to be uniform enough that randomly picking a cryovac works out, but there's a good bit of variation in brisket that makes a difference with the final product, at least when the brisket is prepared with a smoker. YMMV
>Because tips are important to the income of delivery shoppers, I find that I generally get good produce selections
Wait, you tip to get a good selection of produce to be delivered to you? This is very bizarre to me.
Yep. Instacart. I work from home and sometimes I don't want to go to the store (or it would be difficult because I'm on Zoom/Teams a lot), but I need vegetables, meat, milk, etc. for cooking.
With Instacart & Costco memberships and also ordering from the local discount grocers, I can get food delivered for less than it costs to actually go to the mainstream grocery stores like Von's, and I don't get bruised eggplants or cilantro that's already going bad. The drivers/shoppers are generally quite good at picking out items that can lead to higher tips (that or they're just in it for the love of good produce, but either way you can often tell they're not randomly loading the bags).
Delivery shoppers wouldn't be able to pick out the good stuff if it's delivered by drone or whatever.
They could if there are human pickers.
In any event, delivery doesn't always mean the worst of the produce aisle, and while I noted that the incentive of tips might not transfer to robots, keeping repeat customers might be enough incentive for a way to be found to not make robots and grocery synonymous with only frozen food. That might mean human pickers; better automation on the food selection system; pre-inspected, washed and packaged fruits & veggies; etc.
The grocery industry relentlessly optimizes for implicit choices over expressed preferences. Nobody is asking for misters, colored lighting, skeumorphic veggie bins, and wide open sightlines in the produce aisle. Stores do it because customers buy more when they do. The same thing will happen to in-store shopping if consumer preferences swing ever swing that way instead.
I'll believe it when i see it
this kind of stuff is still probably a few orders of magnitude too expensive per unit cost.
I'm also skeptical it'll ever work in America due to the general lack of density.
Having FCs an hour away from your customers, packing groceries into a tiny truck with one or two employees per truck, the trucks alone would never pay for themselves let alone the FCs. This was obvious from the get go and it’s why Walmart has been the only one successfully doing grocery pickup and delivery for 6 years. Every store is an FC and they’re all within 20 minutes of their customers.
There are examples of the warehouse-based model working, but they clearly require both density _and_ mindshare. Its not clear Kroger had either based on the other comments in here. FreshDirect in NYC has been operating since the early 2000s with a fleet of tiny trucks with a couple of employees in them and a giant FC with essentially zero retail footprint.
(As an aside, they also have some of the best meat and produce you can get in the city without going to a farmers market. So many retail grocery stores here lack loading docks, the food handling getting from the truck to the sidewalk to the basement of the store to the shelves is really, really rough especially during the summer months. Skipping that and going warehouse-to-home has advantages)
Also worth mentioning Kroger just lost a multi million dollar lawsuit in Florida after one of their delivery trucks hit a cyclist. I wonder if this has anything to do with it as well.
"Something, something, ... omelettes ... few eggs" -- mouthpiece from corporation that lobbies to cut regulations
I can't find the story, but if it's a human-driven truck there's nothing special about a vehicle hitting someone. Everyone that drives a vehicle is accepting that risk. It's not heartless to have vehicles. And I don't even know what particular regulations you're trying to imply.
Implying that Kroger announced that it would shut down its Florida operations shortly after losing the lawsuit with the cyclist. Nothing more.
I wasn't saying you implied anything. I was saying rolandog seemed to go beyond general cynicism about corporations to an unreasonable complaint.
Looking at the details, I could say Kroger shouldn't have hired her but I'd rather say that if she was dangerous enough to not hire as a driver then her license shouldn't have been reinstated in the first place. (Though that's if "couldn’t recall if her driver’s license was suspended just months before he hired her" means it actually was suspended, and Bike Law isn't doing some trickery with wording.)
Either way good they paid out.
For the shutdown, I do think it's a coincidence. They're shutting down facilities in multiple states and that lawsuit isn't even a tenth of a percent of the relevant costs.
Sounds like they just put them in the wrong places.
> Fenyo added that Kroger’s decision to locate the Ocado centers outside of cities turned out to be a key flaw.
> “Ultimately those were hard places to make this model work,” said Fenyo. “You didn’t have enough people ordering, and you had a fair amount of distance to drive to get the orders to them. And so ultimately, these large centers were just not processing enough orders to pay for all that technology investment you had to make.”
But I think in the cities Kroger grocery stores serve as the fulfilment centers, so they don't need robotic ones.
There's probably still room for automation, but it might have to be different than warehouse automation.
It depends on your business model.
If a basket of groceries brought online costs $15 more than the in-store prices, then you can pick in-store profitably, very easy. That's the instacart model.
But if a basket of groceries brought online costs about the same as buying in-store? With the retailer bearing the costs of picking, packing and delivery instead of the customer?
Well then you need something more efficient than a store.
Even $15 more isn’t enough on account of delivery time, transpo costs, driver time, picking items, and bagging. Current model is for drivers to subsidize by being tricked into taking unprofitable orders.
If Kroger operates the same was as Ocado does in the UK, then the drivers are paid by the hour, with the company providing the van and fuel.
Agree a lot of modern delivery businesses involve "self-employed" drivers getting paid a pittance and using their own vehicle and fuel, though.
From what I've seen, for grocery the model is they'll give you the least desirable or near expired stock that the walk-in customers won't grab. So they're basically saving spoilage. This happens so reliably I'm absolutely convinced this is how they 'pay' for it without raising prices.
I've also noticed this with hardware stores like Lowes. If I place a pickup order they more often than not will pawn off on me their broken, returned, or even used and damaged stock. Items like building wrap will have soil and rips on it, concrete mix will be spoiled from moisture, lumber will be all the most warped pieces (if you don't order a whole pallet, expect every last piece of fractional pallet will be knotted to hell, split, twisted, and badly warped), plumbing valves will be open package and leaky, etc etc. It's like clockwork, even if the stock sitting on the shelf doesn't have these problems. Due to this there are some stores I will never do a pickup/delivery order from.
Here in the UK it's common for online grocery sites to say "fresh for at least X days" on every item, so bread will usually say 5 days, eggs 7 days etc etc. Doesn't matter if I select collection(so someone is picking those items for me at the store) or delivery(so they come from a larger warehouse). They stick to that promise.
And how about charging more in store than online?
On two separate occasions, I stopped by Walmart recently and spent $0.50 extra and $1.50 extra by walking in, going to the aisle, and picking up the item myself.
The Walmart app even tells you that the price on the app is only for online orders. But I didn’t want to wait for an unknown amount of time for a Walmart employee to bring it out to my car (been more than 10 to 15min a few times).
So basically, I pay extra to avoid that volatility in time to run that errand, and I do more work for it.
I'm not sure they want us in the store anymore.
And I'm glad to stay outside.
Using a retail store for fulfillment means orders are accepted for items that are out of stock. the ordering system doesn't have reliable inventory info. Then the customer gets a partial shipment. This is the curse of Safeway grocery ordering.
Kroger placed one of the sites in Orlando to also service Tampa and Jacksonville when they have 0 regular stores in the entire state. They were trying to use it to expand into the area, but I never saw very much in terms of advertising or promotions to drive demand but it could have also been that the robots were so bad that they couldn't attempt to market and push volume.
They literally went too far…
“Never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway”
In the AI analogy, never underestimate the productivity of a human when dealing with a giant pile of groceries. You can throw all the AI and robots you can at something but sometimes a $20 an hour human picking from stacks of goods and produce simply destroys it in raw economics
That’s not really what the article implies, at all.
I've always said that in the back of my mind, the most successful grocery store would be the 'walls' of the store -- bakery, deli, produce, meats, floral, cheeses, dairy and having a little selection of store brands in the middle where consumers can pick up (and vendors can pay a premium for endcap space, because they're the only non-branded products out there), with the rest of the SKU's behind the walls of the grocery store in a fulfillment only model.
Kroger should have pulled a Wal-Mart and turned to their shrink-heavy stores in urban centers to online fulfillment only -- basically only their delivery drivers can retrieve items for an order, and everything's shopped by an associate (Look south of the MicroCenter in Dallas if you want to see what one looks like: it still has the Murphy USA in the parking lot and is basically an unbranded walmart building with 'driver' and 'associate' entrances -- and then deployed the robotics there: less retail space, more online/fulfillment capacity (have humans grab produce and custom sliced/packed items, robots pick the dry goods), and while you lose some cashier jobs, you'll probably have net improvement in terms of time waiting to be picked.
So what grocery stores used to be ~90 years ago, when the norm was you would give the clerk a list and they would grab your items from the back? The only stores I'm still aware of that are setup like this are auto parts stores, where 90% of the inventory is in the back.
Only other places I can think of is weed dispensaries and pharmacies.
You could also count shoe stores and high-end jewelry and watch stores in that the clerk has to go in the back to fetch the non-display model.
I had a wonderful retro futuristic dream about an automated Costco warehouse a few weeks ago. It was one of the less weird dreams so I still remember it clearly.
Basically, each section is like a closed areas with some windows. Customers order at the computers by the windows and flash their membership cards. Robots glide left and right to move 10 samples to the customer, in an arm with rotating clips. Customers can press a button to rotate the samples, observe them, and place an order by pressing a button. Samples not chosen are temporarily stocked at the window as a “stack”.
In each closed section, there are humans who monitors and maintains the robots, and occasionally fetch samples when robots stop working (hopefully it too often, you know those 9s).
At the exit, a human worker assembles the packages and hand them to the customers with a smile. Customers have a last chance to return unwanted items.
Why was it a retro futuristic dream? Because the customers have the option to go into a bakery to enjoy a cup of coffee/tea, some cake and socialize with fellow customers. All of them looked like the men and women from advertisement from Fallout 4.
I’d like to shop or even help build one of these.
What you've re-invented is Keydoozle, from 1937.[1] This was the first automated grocery store. Three stores were opened, but there were enough mechanical problems that it didn't work well.
[1] https://rarehistoricalphotos.com/keedoozle-automated-store-p...
Incredible, they were 75 years ahead of their time.
Sounds like the old general store model, you didn’t browse yourself, the shop keep would bring out what you wanted, it was always behind the counter. I experienced this in China when I started visiting in 1999/early 2000s, it’s mostly not like that anymore though. You still have department stores where you need to buy things first before touching them, though.
Had a large-format (for its time) chain store in Canada like that until 1996: https://www.tvo.org/article/what-happened-to-consumers-distr...
Basically a catalogue store without shipping to your door.
Oh Service Merchandise was a thing in the USA also, where I was living at in Mississippi at least. It was basically catalog focused store with a showroom.
IKEA is kind of like that also, but you have to get everything yourself after picking it out upstairs. And Sears might have been like this at some point before I was born.
Little bit more specialized, but Lee Valley Tools [https://www.leevalley.com/en-ca] stores seem to still operate this way. Showroom (and a few computer kiosks) and order forms up front, then line up for them to pull the items from the back.
Argos in the UK was similar. You would go into the store and look up the product in a catalog. Then go to counter and order it, wait 2-5 minutes and they give you the product. I found it quite convenient.
They still exist. Tend to be pretty competitive on price, although they must be losing out to online shopping in a lot of places since they don't offer any showroom advantage.
Reading the history of Consumers (thanks, I never knew this existed):
>In the 1990s, Consumers Distributing struggled to compete with Zellers and then Walmart Canada. Consumers Distributing sought bankruptcy protection in 1996.
And Zellers went under just a few years ago...
I had hair when Zellers went under
Sorry to say but 2013 was more than a few years ago...
You'll obviously buy fewer things that way, and I can't see that making business sense.
Yeah, that could be true. I'm not sure how many people are similar to me, who are allergic to "window shopping" and just want to buy, pay and exit. My Costco session is less than 30 minutes (from parking to back to car) in average.
I do research price, though, so if they show a big DISCOUNT sign and is more or less honest with it, I'll probably grab some, too.
Sounds like a lot of waiting around, versus just browsing the aisles. Maybe today’s consumers need to rediscover cash-and-carry, though.
In the dream customers just walk around and make orders. It’s actually old style I think, but with robots. Yeah it’s a bit like cash and carry, but customers didn’t move into the sections. They just get to browse the samples robots carried to them.
TBH, now that I think about it, the dream was way more vague than what I described in the reply. My brain probably reasoned about the idea subconsciously.
That was Best store in the 1980s
https://en.wikipedia.org/wiki/Best_Products
In my home town, they tore the Best down and replaced it with a Best Buy, which was very confusing.
Something like this?
https://www.untappedcities.com/automats-cafeterias-nyc/
Yeah, something like this.
The only exception in warehouse was the cafeteria. I guess my brain wanted to make something retro futuristic so it made the cafeteria “retro” — manned by humans and cooked by humans too. There were even balloons inside now that I recall…
You've reinvented the Soviet grocery store, but with robots instead of people and with a $7 cup of coffee.
I remember those stores as I came from a similar background. One vital difference is that they all have workers who have a straight face and don’t give it a fuck about customer service.
Then in the 90s they were all washed away by the new ones.
You’ve just described B&H in New York City.
Now I'm picturing Hasidic robots.
Being pushed about on trolleys and puppeteered by gentiles every Shabbat?
Or their online groceries didnt succeed because people can p4ice shop. I am of the belief Kroger does well because they obfuscate their prices and their tags which make it seems like they are sales truely are not.
Unlike Publix if I see a discount I know it is a discount. Every other item in Kroger has a yellow tag and a red price to make you think you are getting a deal when in fact the red number is higher than regular price at normal stores.
> Or their online groceries didnt succeed because people can p4ice shop.
Ocado does just fine though, and are rarely the cheapest choice.
This is a failure of business model and logistics, not a failure of the robotics.
> Fenyo added that Kroger’s decision to locate the Ocado centers outside of cities turned out to be a key flaw.
They over-spent on automating low-volume FCs. You could draw comparisons to Amdahl's law, they optimised the bit that wasn't the issue, the real issue was delivery distances and times.
Ocado has had good success with the robotics approach in the UK, because the UK is very high density compared to a lot of the US. Plus Ocado put a lot of work into creating good delivery routes, whereas it sounds like that wasn't a component of the automation stack that Kroger bought.
I think we are mixing up two things here.
Robotics for picking and the general feasibility of grocery delivery in the US.
Ocado is good because their stock levels are far more accurate than the other supermarkets for online ordering, so you don't get as many substituted/missing items. This is sort of a side effect of having dedicated picking facilities Vs "real" supermarkets. I would not be surprised if they "lose" less stock as well compared to in supermarket fulfillment.
Then you have "is online grocery good in the US"? There's a lot of areas of the US that have reasonable density for this kind of service imo, and the road infrastructure is generally far superior to the UK which negates any loss of density (as you care about time between deliveries, not distance per se). I imagine the much better parking options in most suburbs in the US also helps efficiency (it's an absolute nightmare for a lot of the online delivery cos when there isn't off street parking in the UK and they have to park pretty far from the drop).
It sounds to me that Kroger just messed up the execution of this in terms of "marketing" more than anything.
> failure of business model and logistics
Just the model. They optimized for tax outcomes. They obviously wanted in on the "Amazon race to the bottom" game.
https://www.leesburg-news.com/2025/11/30/kroger-took-incenti...
> the real issue was delivery distances and times.
Which they could care less about. Where else are you going to go?
Here in the Houston areas, supermarkets like Kroger/Walmart/HEB/etc always have single floor buildings. Why can't they build multi-floor buildings for storage upstairs and retail walk-in sales on the ground floor? On the above ground floors, they can create an automated or semi-automated system for employees to gather up items for online/delivery orders.
Probably because you then need pillars throughout the entire building to support the second floor which you are loading down with a ton of weight. The average forklift weighs 3x or more the weight of the average car, and then adding racking and stock on top of that. Yeah if you completely redesign your storage system to not require forklifts you save weight there, but you end up adding the weight back with all the heavy duty track systems and extra heavy duty racks that are required to eliminate the forklifts. Plus there is liability of having that weight up top, a rack failure on a second floor could take down half the building.
It is possible, but you end up spending 10x as much on the building.
Then put the warehouse on the first floor and put the store on top.
Lots of big cities have grocery stores with parking garages under them, doesn’t seem much different.
The difference is the 100x the cost to build it and the completely different amounts of foot traffic and margins available in dense city centers. Nobody is going to build such a store if their return on investment is expected 50-100 years down the road.
Inner city high rise construction is entirely different from tip-up and bolt together single-story box stores in the suburbs.
Good construction is not cheap and takes many quarters. Land outside the urban area is far too cheap and probably subsidized (directly or with free oversized infrastructure) because local government always wants jobs, even small numbers of shitty jobs.
I thought about this a lot with parking spaces, nobody like big, open, tree-less parking lots. Why not just build them up adjacent to the grocery store.
The answer is $. It costs too much and land is cheaper than building up (In most places).
All recent HEBs have dedicated grocery pickup staging space. I chatted with a staffer once. It is like its own little grocery store where they keep selections of hot, cold and room temperature bags of selected groceries temperature controlled until the orderer comes and they put them together and bring them out.
The ones in Bellaire and Meyerland are two level with parking (aka flooding space) below the store and a smaller parking lot on the second level with the store. Bellaire also has a fancy fuel cell setup for some reason. The single level HEB in Montrose(ish) was built into the site of an old complex of charming but nearly abandoned standalone quad/duplexes with many mature oaks. They seem to have retained nearly all of the trees on the grounds in greenspaces within the parking lot and entryway.
Here's some street view of Montrose. They also had a bike air and repair system when it opened. I'm not certain if it stayed in good repair itself. https://maps.app.goo.gl/KxHAvDqKca4E8L8a7
I would guess that having everything on one floor optimizes the unloading, restocking and logistics. Also construction is cheaper.
The vast majority of the inventory is already on the sales floor.
Also, the backstock is minimal. Stores are designed for turnaround.
Glad someone made this point. I'm curious how long people think most items in a grocery store last? Just consider the trucks you see stocking them on a daily basis. Typically it is bread and other high flow consumables, no?
Right. Not selling things fast enough is a bigger problem than not having enough storage for unsold stock.
I sometime use Ocado in the UK, and it's 'OK' but it's certainly not at the cheap end of the market. I more often use a traditional supermarkets home delivery service where it's manually picked; those supermarkets have the advantage of having very little infrastructure overhead in the picking - they mostly use their existing stores and pick at quiet times/over night. Ocado has to run entire warehouses just for this task. Ocado can only work with packed goods - not weighed vegetables for example - which the hand pickers in store can do, albeit whether they do it well is down to luck and the mood of the picker.
Weird headline, totally unsupported by the article.
According to the article, there were several strategic blunders, including trying the model outside of cities where lack of density cut against it. Plus the apparent dismissal any value their 2700 retail locations could provide.
As far as I can tell, Kroger didn’t acknowledge anything except a change in strategy.
Doesn't that support the article? their bet was massive robotics in centralized warehouses, but that turns out not to be profitable.
Unsure how the headlines doesn't align. Maybe it's different than what I'm seeing:
> Kroger acknowledges that its bet on robotics went too far
Good news for blue collar workers, tough for investors. The bean-counting dream of LLM's and Robotics remains, but until ChatGPT is placing your order at Mcdonalds drive-thrus and Amazon is laying off warehouse associates en masse, i'd say that last 5% is still taking 95% of the time.
McDonald’s is an interesting example because they’re increasingly replacing cashiers with kiosks. Robotics/LLMs seem to have diminishing returns compared to that in the order taking realm.
I love it when people invent things to force everyone perform self service and call it 'progress'.
I like it, I order on my phone before I get to the place and just pick it up.
Any reason to like the old way is just nostalgia in my head.
I usually see people preferring to use the self service in McDonalds or supermarkets when given the option of either, so the consumer must find some benefit to it.
I always choose self service because that's where the volume is. I can wait in one of any Costco lines with 4 carts and 1 person checking them through, or I can wait in the line with 4 carts and 6 self service checkouts.
Despite the math working out insanely well for self service checkout, sometimes the gamble still doesn't pay off and the single employee burns through 4 carts faster than 6 self service checkout kiosks.
Costco does pretty good here though, drug stores go slow as hell.
Yeah the introduction of the kiosks is what tipped the scale and stopped me going to McDonalds. And I used to eat there a couple of times a week at least.
Sure, but not the kitchen staff, which is where the robotics dream is supposed to take you.
I watched a show over 20 years ago that showed a fully automated robotic kitchen at McDonalds. I can only assumed they have continued to evolved it and perfect it as the technology has improved. I think it’s simply a question of when it hits the tipping point on cost.
There may also be an issue with logistics when it comes to making sure the machines keep running if there is a problem. They can barely keep the ice cream machines running.
I imagine kitchen robots are harder than they might sound. Kitchens are rough environments for machines. They are hot, greasy, and steamy. And everything that comes in contact with food needs to be able to be taken apart, washed, and sanitized at least daily.
True, that’s a good example of the commenter’s “last 5% is the 95%”
McDonald’s is also pushing their app pretty hard with lots of incentives.
I hate those stupid things so much. They're really, as far as I can tell, just moving all labor to the kitchen and drive-thru, while considering the dining area an afterthought.
Maybe they're just following the trends their own numbers tell them are happening, but I don't think they trust robotics enough to put an area they truly care about under its purview just yet.
Even 30 years ago more than half the sales at a McDonalds were in the drive through. Some new McDonalds don’t have much of an inside dining room at all anymore, while having multiple drive through lanes.
I don't know what they are thinking, the kiosks are not cheap to install or maintain, they are buggy, and they've put me off from going into McDs anymore. The In-N-Out nearby is cheaper, friendlier with plenty of employees working, (and better quality), so not sure what McD's end game is here.
I don’t like them either. The UX is annoying and it’s way too large. The benefit is that I get to see more options than can fit on the screens and they have photos, but still in person just seems better.
But I’ve read they’re effective, apparently, in consistently upselling compared to a human, so I’m guessing that’s their play.
Taco Bell by us has AI order taking and it is amazing. Quick, always has been getting it correct, and easy to understand. Granted, it's probably very abusable, but for someone just wanting to put in a quick order it is way better than a person.
Whenn I lived in Atlanta the Krogers each had a nickname. There was disco Kroger because of its disco ball. There was murder Kroger that purportedly had been the site of a murder.
This I guess is Robo Kroger.
In Charlottesville all the Krogers are quite different.
A weird, dark, maze-like warehouse-feeling Kroger that just closed.
We have a really nice Kroger a bit outside town. I always think of it as the Gucci Kroger.
A college-kid, cheaper Kroger close to the center of town. The cheaper version of the Harris Teeter nearby.
There's as much variation in individual Krogers as between other grocery chains!
I like to imagine that whenn is like iff -- ie, when would mean "when and only when", lol
A common practice in Denver. Kroger's local brand is "King Soopers". There's Scary Soopers, Queen Soopers, and ironically El Safeway and Soviet Safeway.
3 CFCs (robotics centers) closed, 5 continuing operating [1]. Initial commitment was 20 & Kroger is paying 350m$ to compensate the partner.
I don't know what success looks like but it's probably fair to say they were over-extended by roughly 30-40%.
https://chainstoreage.com/kroger-pay-350-million-automation-...
I remember a glowing video about this thing (by Tom Scott maybe?) and being confused how it could ever compete with humans being paid slave wages.
Guess I was right.
It looks like they got the robots together but forgot the groceries.
all it takes is one junior executive gets caught by one chinese robot saleswoman, and the next thing you know…
TIL Ocado is supposed to be an automation/robotics co.
I associate it more with delivery vans that seem to be in no particular hurry (unlike uber eats / DPD / UPS etc)
it's just a wheeled bot that's driven by a joystick by some offshore person /s
Notable that the reasons for failure to meet benchmarks was that the locations were too far away, and that they are moving to the “Micro-Fulfillment Center” approach that Amazon is doing at Whole Foods. This is exactly what everyone predicted when Amazon bought WF - turn it into a grocery FC.
That makes sense to me.
Feels like we’re going to have warehouse scale vending machines in cities, and delivery bots taking them from the warehouse-vending-machine to the customer.
I like being able to see the thing I'm going to get and holding it in my hand.
I like not going to the store more.
Because tips are important to the income of delivery shoppers, I find that I generally get good produce selections. It might be difficult to transition that particular incentive to robots, but the point is that delivery items don't have to suck.
The only thing I really still pick out by hand every time are beef briskets. Pork shoulders tend to be uniform enough that randomly picking a cryovac works out, but there's a good bit of variation in brisket that makes a difference with the final product, at least when the brisket is prepared with a smoker. YMMV
>Because tips are important to the income of delivery shoppers, I find that I generally get good produce selections
Wait, you tip to get a good selection of produce to be delivered to you? This is very bizarre to me.
Yep. Instacart. I work from home and sometimes I don't want to go to the store (or it would be difficult because I'm on Zoom/Teams a lot), but I need vegetables, meat, milk, etc. for cooking.
With Instacart & Costco memberships and also ordering from the local discount grocers, I can get food delivered for less than it costs to actually go to the mainstream grocery stores like Von's, and I don't get bruised eggplants or cilantro that's already going bad. The drivers/shoppers are generally quite good at picking out items that can lead to higher tips (that or they're just in it for the love of good produce, but either way you can often tell they're not randomly loading the bags).
Delivery shoppers wouldn't be able to pick out the good stuff if it's delivered by drone or whatever.
They could if there are human pickers.
In any event, delivery doesn't always mean the worst of the produce aisle, and while I noted that the incentive of tips might not transfer to robots, keeping repeat customers might be enough incentive for a way to be found to not make robots and grocery synonymous with only frozen food. That might mean human pickers; better automation on the food selection system; pre-inspected, washed and packaged fruits & veggies; etc.
The grocery industry relentlessly optimizes for implicit choices over expressed preferences. Nobody is asking for misters, colored lighting, skeumorphic veggie bins, and wide open sightlines in the produce aisle. Stores do it because customers buy more when they do. The same thing will happen to in-store shopping if consumer preferences swing ever swing that way instead.
I'll believe it when i see it
this kind of stuff is still probably a few orders of magnitude too expensive per unit cost.
I'm also skeptical it'll ever work in America due to the general lack of density.
Having FCs an hour away from your customers, packing groceries into a tiny truck with one or two employees per truck, the trucks alone would never pay for themselves let alone the FCs. This was obvious from the get go and it’s why Walmart has been the only one successfully doing grocery pickup and delivery for 6 years. Every store is an FC and they’re all within 20 minutes of their customers.
There are examples of the warehouse-based model working, but they clearly require both density _and_ mindshare. Its not clear Kroger had either based on the other comments in here. FreshDirect in NYC has been operating since the early 2000s with a fleet of tiny trucks with a couple of employees in them and a giant FC with essentially zero retail footprint.
(As an aside, they also have some of the best meat and produce you can get in the city without going to a farmers market. So many retail grocery stores here lack loading docks, the food handling getting from the truck to the sidewalk to the basement of the store to the shelves is really, really rough especially during the summer months. Skipping that and going warehouse-to-home has advantages)
Also worth mentioning Kroger just lost a multi million dollar lawsuit in Florida after one of their delivery trucks hit a cyclist. I wonder if this has anything to do with it as well.
"Something, something, ... omelettes ... few eggs" -- mouthpiece from corporation that lobbies to cut regulations
I can't find the story, but if it's a human-driven truck there's nothing special about a vehicle hitting someone. Everyone that drives a vehicle is accepting that risk. It's not heartless to have vehicles. And I don't even know what particular regulations you're trying to imply.
Implying that Kroger announced that it would shut down its Florida operations shortly after losing the lawsuit with the cyclist. Nothing more.
Here is the story
https://www.facebook.com/100064532630592/posts/pfbid0DYoPXet...
I wasn't saying you implied anything. I was saying rolandog seemed to go beyond general cynicism about corporations to an unreasonable complaint.
Looking at the details, I could say Kroger shouldn't have hired her but I'd rather say that if she was dangerous enough to not hire as a driver then her license shouldn't have been reinstated in the first place. (Though that's if "couldn’t recall if her driver’s license was suspended just months before he hired her" means it actually was suspended, and Bike Law isn't doing some trickery with wording.)
Either way good they paid out.
For the shutdown, I do think it's a coincidence. They're shutting down facilities in multiple states and that lawsuit isn't even a tenth of a percent of the relevant costs.