Groceries, at the heart of one of our most basic business models -- need food, buy food, eat food -- don’t seem like the first place to watch a high-tech battle of the behemoths, but that’s what’s unfolding.
Kroger (NYSE: KR) is launching a pilot drone delivery program from a store in Centerville in its home state of Ohio with plans to follow up this summer at one of its Ralphs stores in California, the company said in a May 3 press release.
FAA-licensed drone pilots will guide the delivery of up to about five pounds of products in as little as 15 minutes to the location of the smartphone hosting the app that placed the order, the company said. (For example: baby supplies and the ingredients for s’mores delivered to a park.)
"The possibilities for customers are endless -- we can enable Kroger customers to send chicken soup to a sick friend or get fast delivery of olive oil if they run out while cooking dinner,” said Beth Flippo, chief technology officer for Kroger’s drone-flying partner in the venture, Drone Express from TELEGRID Technologies.
A concept that’s just now taking flight
Other companies, of course, are entering this air space, including two in development by Kroger’s likely fiercest competitors in the burgeoning e-commerce grocery space: Walmart and Amazon. The former has already been flying short missions from a store in Fayetteville, North Carolina, according to Bloomberg.
The latter got its Federal Aviation Administration clearance last August, joining UPS and Alphabet, according to CNBC.
Nobody is doing much of it yet, but Kroger seems intent on including low-altitude delivery as an integral part of its plans to expand the grocery giant’s burgeoning e-commerce business (more than $10 billion in sales in 2020).
"The pilot reinforces the importance of flexibility and immediacy to customers, powered by modern, cost-effective, and efficient last-mile solutions. We're excited to test drone delivery and gain insights that will inform expansion plans as well as future customer solutions," said Judy Kalmbach, the company’s group vice president of product experience.
More new stuff from an old hand at the grocery game
This isn’t Kroger’s first rodeo in rapid adoption of remote technologies. The company announced just last month that it had soft-launched a 375,000-square-foot warehouse that depends on robots to prepare home deliveries in a 90-mile radius of the facility about 30 miles from Kroger’s Cincinnati headquarters.
That announcement detailed the grocery giant’s plans to expand home delivery services across the country. All this should help Kroger keep up with the competition and sustain the performance that has kept the company’s stock a strong performer since its 1979 IPO. (That was at $0.75 a share, by the way, and the company was already nearly a hundred years old then.)
The Millionacres bottom line
Kroger now has nearly 2,800 stores operating under two dozen names in 35 states and annual sales of more than $120 billion.
Many of those stores anchor shopping centers that are prime property for real estate investment trusts (REITs) and other commercial real estate investors banking on the chain’s continued success. And then there are industrial REITs and other investors in warehouses that serve this emerging new supply chain, too.
Far from resting on its laurels, this venerable grocer continues to adopt its ways to new technologies and expectations, and that bodes well for its myriad stakeholders.