The news came to Tampa Bay on billboards, in mailboxes and through radio and TV ads: Residents can now get groceries delivered by the well-known, Cincinnati-based, 138-year-old Kroger grocery store.
But how exactly can customers get their bacon, broccoli and baby food delivered by a chain that doesn’t have actual stores here?
This month, Kroger made an e-commerce foray into Florida with a 375,000 square-foot “customer fulfillment center” in Groveland, a Lake County town west of Orlando. That high-tech facility serves as the base for deliveries in Tampa and St. Petersburg, Orlando and Jacksonville.
Credit the pandemic, which skyrocketed online grocery shopping in the Sunshine State, something Kroger appears ready to bet on.
But notably, America’s largest grocery store chain is not taking on Florida’s uncontested king, Publix, with traditional brick-and-mortar stores.
“We’re really focusing on the e-commerce and delivery service right now,” said Andrea Colby, e-commerce corporate affairs and communications manager for Kroger.
And what’s going on in that warehouse — a highly-automated system of a thousand busy robots whizzing around fulfilling customer requests — will be closely watched by the industry, particularly post-pandemic.
“It’s really going to be fascinating to see how well Kroger is going to be able to break into that market just with an online delivery approach,” said Gary Hawkins, CEO of the Center for Advancing Retail & Technology.
Here’s how it works: A customer places an order at Kroger.com or on the store’s app for next-day delivery. Regular groceries, fresh food, adult beverages and personal care products are available. Delivery is $9.95, tip not required.
At the Groveland center, a system developed by the UK-based e-commerce technology company Ocado Group fulfills the order using rectangular robots on 3-D grids “orchestrated by proprietary air-traffic control systems,” according a news release. The Groveland facility also employs 400 humans.
“I would say Kroger is leading the industry with their innovations in the fulfillment center, there’s no doubt about that, just from a sheer dollar amount and time amount,” said Mark Thompson of GroceryAnchored.com.
Orders are driven in semi-trucks to “spoke” facilities in Tampa and Jacksonville. (Orlando is close enough to be served by the Groveland center.) Tampa’s spoke is in an industrial park between U.S. 301 and the Lee Roy Selmon Expressway and employs about 180 people. There, products are loaded into vans and delivered.
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Grocery retailers had been exploring delivery options well before the pandemic. But enthusiasm for ordering groceries accelerated in a pandemic that had people leery of going into stores.
“We saw online grocery explode,” Hawkins said.
Online shopping, which used to constitute 1 to 3 three percent of sales, went as high as 10 percent, Hawkins said. When the world slowly reopened and more people started shopping live again, e-commerce decreased some, but is still “way above what it was pre-pandemic,” he said.
And now that people are more comfortable with grocery delivery, it’s expected to grow, Hawkins said.
“The general consensus is that as an industry we’re probably going to see 20 to 25 percent of total sales to be online in the next four or five years,” he said. The trend may lean toward cross-shopping or “omnichanneling” — customers getting some items like bulky bags of diapers or dog food delivered to their doors, but going into stores to pick out their own produce.
Kroger may be banking on that as well — as Florida visitors who are comfortable with their name from back home.
While Kroger is “certainly investing, that is much much less than what it would cost them to go in and build six or eight or ten brand new stores,” Hawkins said.
Publix could not be reached for comment for this story.
““It’s really going to be interesting to watch how this plays out down there,” Hawkins said.