Kroger Slows Delivery Rollout in Bid for Longer-Term Viability

Around the world, grocers are reconceiving their grocery delivery businesses to better meet consumers’ needs.

Kroger is slowing down its automated fulfillment center rollout but remains committed to opening more, as the grocery giant’s technology partner, British online grocery company Ocado, said Tuesday (March 28), Reuters reported. The grocer has opened eight of the 20 initially planned eCommerce fulfillment centers, with an additional eight ordered, according to Ocado CEO Tim Steiner.

“They are committed to building more, they just want to make those [existing] ones work as well as they can before they roll out loads – very sensible thing to do,” Steiner said, per the outlet.

On an earnings call earlier this month, Kroger noted 22% year-over-year growth in delivery.

While eGrocery adoption has come a long way in recent years, digital remains the exception rather than the norm for most shoppers. Research from PYMNTS’ new study “Changes in Grocery Shopping Habits and Perception,” which draws from a December survey of more than 2,400 U.S. consumers, finds that 45% now shop for groceries online at least some of the time, but only 7% do so all the time.

Meanwhile, as Kroger slows its delivery rollouts down, Deliveroo is ramping up its ultrafast grocery fulfillment capabilities. The United Kingdom-based aggregator is adding two new dark stores, one in Acton, London partnership with supermarket chain Waitrose and the other in London’s Norbury area with grocer Morrisons, per a Grocery Gazette report.

The company maintains that there is high demand for last-minute essentials, offering more than 1,300 products at the former site and 1,600 at the latter.

“It’s fantastic to be rolling out our HOP service in further prime locations across the capital, bringing greater choice, flexibility and selection to even more customers and building on our existing partnerships with major grocery brands,” Carlo Mocci, Deliveroo’s chief business officer for the U.K. and Ireland, said, according to the outlet. “Our two new HOPs reflect the strong demand we have for the supply of household items and dinner favorites at your door in minutes.”

Yet, the quick-commerce industry overall has been facing challenges amid inflation. For instance, ultrafast grocery delivery firm Food Rocket, backed by convenience retail giant Couche-Tard, recently shut down, having burned through its funding and finding itself unable to bring in additional capital. Plus, also this month, it was revealed that major convenience retail delivery service Gopuff has cut about 2% of its workforce.

Yet British shoppers are disproportionately likely, relative to the global population, to seek the convenience of home delivery. The U.K. edition of PYMNTS’ “Global Digital Shopping Playbook” reveals that British eCommerce shoppers’ preference for getting purchases delivered directly to their homes was 10% higher than the 71% average across all six countries surveyed.

Back in the States, meanwhile, DoorDash is looking to boost grocery delivery adoption by making the option more accessible to a greater share of consumers. The company announced this week that it will enable Supplemental Nutrition Assistance Program (SNAP) payments across the United States by 2025.

“Local delivery can help reduce transportation and other barriers by giving people access to nutritious food and healthy choices in a convenient and dignified way,” Max Rettig, vice president, public policy and social impact at DoorDash, said in a statement.