How Kroger is Using Partnerships to Drive the Grocery Store Experience
Big brands are feeling the pressure to offer their customers more and more services to remain competitive. With ecommerce giants such as Amazon working to be all things to all people, many other companies find themselves playing catchup.
However, while Amazon had the financial clout and technical expertise to bring all manner of offerings to the table on its own, this is often simply not viable for other retailers. It's in these situations that these companies turn to partnerships to solve these issues. With an intelligent partnership, a brand can instantly acquire the infrastructure and expertise they need to incorporate a new customer experience into their offering. They can also create a mutually beneficial arrangement that adds revenue to both parties.
As a household name grocery brand, Kroger understands its market well and has recently embarked on a series of innovative partnerships that it hopes will keep it competitive in the space for years to come.
In the first of these partnerships, Kroger teamed up with computing giant Microsoft to incorporate Internet of Things technology into its Restock Kroger platform. Kroger hopes that it will pilot a connected store experience and, together with Microsoft, jointly market a commercial RaaS product to the industry.
"Kroger is building a seamless ecosystem driven by data and technology to provide our customers with personalized food inspiration," said Kroger Chairman and CEO, Rodney McMullen. "We are identifying partners through Restock Kroger who will help us reinvent the customer experience and create new profit streams that will also accelerate our core business growth. We are excited to collaborate with Microsoft to redefine grocery retail."
The Microsoft partnership will include smart shelving with dynamic digital labels, increased productivity through intelligent stock monitoring and product location, plus the ability for Kroger to generate additional revenue by selling targeted digital advertising space in the aisles themselves.
The next exciting step on Kroger's partnership strategy involves robotics company Nuro — the grocery store brand seeks to establish a network of autonomous grocery delivery vehicles. Grocery home delivery is becoming a must-offer service for many supermarket brands and autonomous vehicles are a great way to help facilitate this.
This innovative service offers customers in the Houston area a new type of delivery service option. Kroger and Nuro are beginning the service with Nuro's manual and self-driving Toyota Prius fleet and will introduce the next generation of Nuro's custom driverless vehicle after testing is complete.
"We're excited to launch our autonomous vehicle delivery pilot with Nuro in Houston, a leading city that embraces innovation and technology," said Kroger's Houston Division President, Marlene Stewart. "Kroger continues to redefine the customer experience, and we're thrilled to provide our customers with a new way to have their groceries delivered. We thank Texas Governor Greg Abbott, Houston Mayor Sylvester Turner, and the Houston community for being terrific partners and for supporting consumer-focused robotics."
Kroger is also partnering with online grocery brand Ocado and currently has six high tech fulfilment centers in the works, the first of which should be ready to begin operations by 2021.
Located in Monroe, Ohio, the 335,000-square-foot, $55 million facility will use the very latest in robotics and automation technology to pick and sort grocery orders. It is expected to create around 400 jobs for the region.
"Kroger is incredibly excited to reach this meaningful milestone in our Restock Kroger vision to serve America through food inspiration and uplift," said McMullen in a statement. "Our partnership with Ocado will introduce transformative e-commerce, fulfillment and logistics technology in the US and bring customers fresher food faster than ever before, accelerating our ability to provide anything, anytime, anywhere."
Finally, to compete with the purchasing power of brands such as Amazon, Kroger and Walgreens have formed a procurement alliance that will help the two brands lower costs and foster innovation by combining their resources. Few brands can compete with Amazon's buying power on their own, so by forming such a partnership, these two companies can increase their procurement capabilities significantly.
"This collaboration is an extension of the strategic collaboration announced last year to create value for customers and shareholders of both companies," said Kroger Chief Financial Officer, Gary Millerchip. "Kroger and Walgreens share a commitment to finding value and efficiency improvements by increasing innovation and competition through sourcing. This concept brings together the best of two great organizations to reinvent critical components of our sourcing practices."
We live in an increasingly connected world. Brands like Kroger understand that no man is an island, and by forming strong and mutually beneficial partnerships they can become leaner, more effective machines, able to drive next-generation customer experiences.
Innovative partnerships are set to be a hot topic at Digital Food and Beverage 2020, taking place in July at the Hilton Austin TX.
Download the agenda today for more information and insights.
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