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Kroger's Automation Reckoning | Fast Five Shorts · Omni Talk Retail

• 0:00
  Kroger
• 0:00
  is
• 0:00
  reviewing
• 0:01
  its
• 0:01
  automated
• 0:02
  e
• 0:02
  commerce
• 0:02
  fulfillment
• 0:03
  network.
• 0:03
  According
• 0:03
  to
• 0:04
  GroceryDive,
• 0:04
  Kroger
• 0:05
  is
• 0:05
  conducting
• 0:05
  a
• 0:06
  quote,
• 0:06
  full
• 0:06
  site
• 0:07
  by
• 0:07
  site
• 0:07
  analysis,
• 0:08
  end
• 0:08
  quote,
• 0:08
  of
• 0:09
  its
• 0:09
  automated
• 0:09
  order
• 0:10
  fulfillment
• 0:10
  network
• 0:10
  as
• 0:11
  it
• 0:11
  looks
• 0:11
  to
• 0:11
  improve
• 0:11
  profitability
• 0:12
  and
• 0:13
  reduce
• 0:13
  costs,
• 0:14
  interim
• 0:14
  CEO
• 0:14
  Ron
• 0:15
  Sargent
• 0:15
  said
• 0:15
  Thursday
• 0:16
  during
• 0:16
  the
• 0:16
  grocer's
• 0:17
  second
• 0:17
  quarter
• 0:17
  earnings
• 0:18
  call.
• 0:18
  Sargent
• 0:19
  said
• 0:19
  that
• 0:19
  the
• 0:19
  supermarket
• 0:20
  operator
• 0:20
  intends
• 0:21
  to
• 0:21
  focus
• 0:21
  on
• 0:21
  store
• 0:22
  level
• 0:22
  fulfillment
• 0:23
  as
• 0:23
  it
• 0:23
  strives
• 0:23
  to
• 0:23
  provide
• 0:24
  grocery
• 0:25
  delivery
• 0:25
  services
• 0:26
  faster
• 0:27
  and
• 0:27
  more
• 0:27
  efficiently.
• 0:28
  Instead,
• 0:29
  developed
• 0:29
  in
• 0:29
  partnership
• 0:30
  with
• 0:30
  UK
• 0:30
  based
• 0:31
  automatic
• 0:31
  sorry
• 0:32
  automation
• 0:32
  specialist
• 0:33
  Ocado,
• 0:33
  Kroger's
• 0:34
  automated
• 0:34
  e
• 0:34
  commerce
• 0:35
  network
• 0:35
  features
• 0:36
  robotic
• 0:36
  warehouses
• 0:37
  that
• 0:37
  connect
• 0:38
  to
• 0:38
  smaller
• 0:38
  facilities
• 0:39
  known
• 0:39
  as
• 0:40
  spokes.
• 0:41
  Quote
• 0:41
  where
• 0:42
  we
• 0:42
  have
• 0:42
  been
• 0:42
  strong,
• 0:43
  where
• 0:43
  we
• 0:43
  have
• 0:44
  seen
• 0:44
  strong
• 0:44
  demand
• 0:44
  in
• 0:45
  high
• 0:45
  density
• 0:45
  areas,
• 0:45
  these
• 0:46
  facilities
• 0:46
  deliver
• 0:47
  better
• 0:47
  results
• 0:47
  than
• 0:48
  those
• 0:48
  facilities
• 0:48
  where
• 0:48
  density
• 0:49
  is
• 0:49
  lower
• 0:49
  and
• 0:50
  customer
• 0:50
  adoption
• 0:51
  has
• 0:51
  been
• 0:51
  slow,
• 0:51
  slower,
• 0:52
  end
• 0:52
  quote
• 0:52
  Sargent
• 0:53
  said
• 0:53
  about
• 0:53
  the
• 0:53
  network
• 0:54
  adding
• 0:54
  quote
• 0:55
  we
• 0:55
  are
• 0:55
  taking
• 0:55
  a
• 0:56
  hard
• 0:56
  look
• 0:56
  at
• 0:56
  some
• 0:56
  of
• 0:57
  our
• 0:57
  automated
• 0:57
  facilities,
• 0:58
  end
• 0:58
  quote.
• 0:59
  Chris,
• 1:00
  what
• 1:00
  are
• 1:01
  your
• 1:01
  insights
• 1:01
  here
• 1:01
  on
• 1:02
  Kroger's
• 1:03
  purported
• 1:03
  site
• 1:03
  by
• 1:03
  site
• 1:04
  analysis
• 1:04
  of
• 1:04
  its
• 1:04
  automated
• 1:05
  e
• 1:05
  commerce
• 1:06
  fulfillment
• 1:06
  network?
• 1:07
  Oh,
• 1:07
  my
• 1:07
  insights?
• 1:08
  That's
• 1:08
  a
• 1:08
  new
• 1:08
  question.
• 1:09
  We
• 1:09
  haven't
• 1:09
  had
• 1:09
  that
• 1:09
  before.
• 1:10
  All
• 1:11
  right,
• 1:11
  well,
• 1:11
  you
• 1:12
  know
• 1:12
  my
• 1:12
  thoughts
• 1:12
  in
• 1:12
  general
• 1:13
  for
• 1:13
  this.
• 1:13
  I
• 1:14
  think
• 1:14
  this
• 1:14
  is
• 1:14
  the
• 1:14
  right
• 1:14
  move.
• 1:15
  Yeah,
• 1:15
  I
• 1:15
  do.
• 1:15
  I
• 1:16
  think,
• 1:16
  you
• 1:16
  know,
• 1:16
  Ron
• 1:17
  Sargent,
• 1:17
  you
• 1:17
  know,
• 1:17
  the
• 1:18
  interim
• 1:18
  CEO,
• 1:18
  he
• 1:18
  appears
• 1:19
  to
• 1:19
  be
• 1:19
  making
• 1:19
  the
• 1:19
  tough
• 1:20
  decisions,
• 1:20
  he's
• 1:20
  making
• 1:21
  the
• 1:21
  tough
• 1:21
  calls.
• 1:22
  He
• 1:22
  isn't
• 1:22
  gonna.
• 1:22
  You
• 1:23
  know,
• 1:23
  one
• 1:23
  of
• 1:23
  the
• 1:23
  first
• 1:23
  things
• 1:23
  you
• 1:24
  learn
• 1:24
  about
• 1:24
  in
• 1:24
  business
• 1:24
  school
• 1:25
  is
• 1:25
  like,
• 1:25
  you
• 1:25
  don't
• 1:25
  ever
• 1:26
  want
• 1:26
  to
• 1:26
  fall
• 1:26
  into
• 1:26
  the
• 1:26
  sunk
• 1:27
  cost
• 1:27
  trap.
• 1:27
  Like
• 1:27
  the
• 1:27
  fact
• 1:28
  you've
• 1:28
  spent
• 1:28
  billions
• 1:28
  of
• 1:29
  dollars
• 1:29
  on
• 1:29
  something
• 1:29
  that
• 1:29
  you're
• 1:30
  gonna
• 1:30
  keep
• 1:30
  doubling
• 1:30
  down
• 1:30
  on
• 1:31
  until
• 1:31
  it
• 1:31
  works.
• 1:32
  So
• 1:32
  he's
• 1:32
  trying
• 1:32
  to
• 1:32
  avoid
• 1:33
  that.
• 1:33
  That's
• 1:33
  my
• 1:34
  first
• 1:34
  takeaway.
• 1:34
  My
• 1:34
  other
• 1:35
  takeaway
• 1:36
  is
• 1:36
  that,
• 1:36
  you
• 1:37
  know,
• 1:37
  this
• 1:37
  is
• 1:37
  kind
• 1:37
  of
• 1:37
  how
• 1:38
  we
• 1:38
  figured
• 1:38
  things
• 1:38
  were
• 1:38
  gonna
• 1:39
  play
• 1:39
  out.
• 1:39
  Yeah.
• 1:39
  You
• 1:40
  know,
• 1:40
  if
• 1:40
  you
• 1:40
  look
• 1:40
  back
• 1:40
  at
• 1:40
  our
• 1:41
  coverage
• 1:41
  for
• 1:41
  the
• 1:41
  past,
• 1:42
  God,
• 1:42
  I
• 1:42
  don't
• 1:42
  know,
• 1:43
  five,
• 1:43
  six,
• 1:43
  seven
• 1:44
  years
• 1:44
  since
• 1:44
  we
• 1:45
  started
• 1:45
  talking
• 1:45
  about
• 1:45
  micro
• 1:45
  fulfillment,
• 1:46
  we
• 1:47
  always
• 1:47
  had
• 1:47
  questions
• 1:47
  about
• 1:48
  whether
• 1:48
  or
• 1:48
  not
• 1:48
  the
• 1:49
  large
• 1:49
  centralized
• 1:50
  automated
• 1:51
  facilities
• 1:52
  would
• 1:52
  play
• 1:52
  out
• 1:52
  across
• 1:53
  America.
• 1:53
  And
• 1:54
  it
• 1:54
  sounds
• 1:54
  like
• 1:54
  they
• 1:54
  may
• 1:54
  not
• 1:55
  be.
• 1:55
  And
• 1:55
  it
• 1:55
  sounds
• 1:55
  like
• 1:56
  where
• 1:56
  they
• 1:56
  are
• 1:56
  working
• 1:56
  is
• 1:57
  where
• 1:57
  there's
• 1:57
  urban
• 1:58
  density,
• 1:58
  where
• 1:59
  you
• 1:59
  can,
• 1:59
  where
• 1:59
  it's
• 2:00
  similar
• 2:00
  to
• 2:00
  what
• 2:00
  you
• 2:00
  see
• 2:01
  in
• 2:01
  London,
• 2:01
  where
• 2:01
  Ocado
• 2:02
  is
• 2:02
  successful.
• 2:03
  So
• 2:03
  in
• 2:04
  some
• 2:04
  ways
• 2:04
  I'm
• 2:04
  not
• 2:04
  surprised
• 2:05
  by
• 2:05
  this,
• 2:05
  but
• 2:05
  those
• 2:06
  are
• 2:06
  my
• 2:06
  thoughts
• 2:06
  right
• 2:06
  now.
• 2:07
  But
• 2:07
  I'm
• 2:07
  curious.
• 2:08
  I'm
• 2:08
  interviewing
• 2:08
  Ocado
• 2:09
  CEO
• 2:09
  Tim
• 2:10
  Steiner
• 2:10
  on
• 2:10
  stage.
• 2:11
  I
• 2:11
  haven't
• 2:11
  actually
• 2:11
  met
• 2:12
  him
• 2:12
  yet
• 2:12
  or
• 2:12
  talked
• 2:13
  about
• 2:14
  what
• 2:14
  our
• 2:14
  discussion
• 2:15
  topic's
• 2:15
  gonna
• 2:15
  be,
• 2:15
  but
• 2:15
  I'm
• 2:16
  Hoping
• 2:16
  to
• 2:16
  at
• 2:16
  least
• 2:16
  get
• 2:17
  some
• 2:17
  insight
• 2:17
  into,
• 2:18
  you
• 2:18
  know,
• 2:18
  how
• 2:18
  they're
• 2:19
  thinking
• 2:19
  about
• 2:20
  Kroger,
• 2:21
  the
• 2:21
  landscape
• 2:22
  for
• 2:22
  automation
• 2:22
  in
• 2:22
  the
• 2:23
  US
• 2:23
  but
• 2:23
  really
• 2:23
  broadly
• 2:24
  too,
• 2:24
  because
• 2:24
  I
• 2:24
  think
• 2:24
  they're
• 2:25
  in
• 2:25
  like
• 2:25
  14
• 2:25
  countries.
• 2:26
  And
• 2:27
  I
• 2:27
  got
• 2:27
  to
• 2:27
  imagine
• 2:27
  there's
• 2:28
  a
• 2:28
  lot
• 2:28
  of
• 2:29
  similarities
• 2:29
  in
• 2:29
  terms
• 2:30
  of
• 2:30
  what
• 2:30
  works
• 2:30
  across
• 2:30
  those
• 2:31
  countries
• 2:31
  as
• 2:31
  well
• 2:32
  as
• 2:32
  differences
• 2:32
  that
• 2:32
  we
• 2:33
  can
• 2:33
  learn
• 2:33
  about
• 2:33
  as
• 2:33
  U.S.
• 2:34
  grocers
• 2:34
  and
• 2:35
  consumers
• 2:35
  too.
• 2:35
  So
• 2:36
  that's
• 2:36
  my
• 2:37
  takeaway.
• 2:37
  Yeah,
• 2:37
  I
• 2:38
  think
• 2:38
  you
• 2:38
  hit
• 2:38
  on
• 2:38
  a
• 2:39
  lot
• 2:39
  of
• 2:39
  important
• 2:39
  points.
• 2:40
  One
• 2:40
  being,
• 2:40
  you
• 2:41
  know,
• 2:41
  we
• 2:41
  know
• 2:41
  that
• 2:42
  in
• 2:42
  the
• 2:43
  US
• 2:43
  Especially,
• 2:44
  stores
• 2:44
  are
• 2:45
  still
• 2:46
  important
• 2:46
  fulfillment
• 2:47
  centers
• 2:47
  when
• 2:47
  it
• 2:47
  comes
• 2:48
  to
• 2:48
  doing
• 2:48
  last
• 2:48
  mile
• 2:49
  efficiently
• 2:50
  and,
• 2:51
  and
• 2:52
  really
• 2:52
  being
• 2:52
  cost
• 2:53
  effective.
• 2:53
  That's
• 2:53
  cheaper.
• 2:54
  Right?
• 2:54
  Is.
• 2:54
  And
• 2:55
  that's
• 2:55
  why
• 2:55
  I
• 2:55
  think
• 2:55
  you
• 2:55
  see
• 2:56
  even
• 2:56
  retailers
• 2:57
  like
• 2:57
  Target
• 2:57
  expanding
• 2:58
  their
• 2:58
  footprints
• 2:59
  in
• 2:59
  stores
• 2:59
  and
• 2:59
  expanding
• 3:00
  their
• 3:00
  back
• 3:00
  room
• 3:00
  so
• 3:01
  that
• 3:01
  they
• 3:01
  can
• 3:01
  do
• 3:01
  more
• 3:01
  in
• 3:01
  store
• 3:02
  fulfillment.
• 3:02
  Even
• 3:02
  Kroger
• 3:03
  is
• 3:03
  talking
• 3:03
  about
• 3:04
  some
• 3:04
  of
• 3:04
  their
• 3:04
  new
• 3:04
  concepts
• 3:05
  where
• 3:05
  they're
• 3:05
  going
• 3:05
  to,
• 3:06
  you
• 3:06
  know,
• 3:06
  give
• 3:06
  more
• 3:07
  space
• 3:07
  in
• 3:07
  the
• 3:07
  back
• 3:07
  room.
• 3:09
  Although
• 3:09
  I
• 3:09
  don't
• 3:10
  think
• 3:10
  that
• 3:10
  takes
• 3:10
  away
• 3:11
  from
• 3:12
  the
• 3:12
  role
• 3:12
  that
• 3:12
  these
• 3:12
  fulfillment
• 3:13
  centers
• 3:13
  play.
• 3:14
  But
• 3:14
  I
• 3:14
  think
• 3:14
  Ron
• 3:14
  Sargent
• 3:15
  is
• 3:15
  smartly
• 3:15
  kind
• 3:15
  of
• 3:16
  through
• 3:16
  and
• 3:16
  looking
• 3:17
  at
• 3:17
  what,
• 3:17
  where
• 3:18
  do
• 3:18
  these
• 3:18
  make
• 3:19
  sense?
• 3:19
  Because
• 3:19
  they
• 3:20
  do
• 3:20
  make
• 3:20
  sense.
• 3:20
  Walmart's
• 3:21
  building
• 3:21
  another.
• 3:22
  You
• 3:22
  know,
• 3:22
  they're
• 3:22
  building
• 3:23
  facilities
• 3:23
  where
• 3:24
  they're
• 3:24
  automating
• 3:24
  some
• 3:25
  of
• 3:25
  these
• 3:25
  processes
• 3:25
  too.
• 3:26
  But
• 3:26
  I
• 3:26
  think
• 3:26
  it's
• 3:26
  just
• 3:27
  really
• 3:27
  reevaluating
• 3:28
  smartly
• 3:29
  as
• 3:29
  Sargent
• 3:29
  is
• 3:29
  the
• 3:29
  nodes
• 3:30
  in
• 3:30
  the
• 3:30
  network
• 3:30
  and
• 3:31
  what
• 3:31
  makes
• 3:31
  sense
• 3:32
  and
• 3:32
  what,
• 3:32
  what
• 3:33
  buildings
• 3:34
  are
• 3:34
  fulfilling
• 3:35
  which
• 3:35
  operations.
• 3:36
  But
• 3:36
  I'm
• 3:36
  curious
• 3:37
  about
• 3:37
  this
• 3:37
  because
• 3:37
  what
• 3:38
  this
• 3:38
  really
• 3:38
  makes
• 3:39
  me
• 3:39
  think
• 3:39
  about
• 3:39
  more
• 3:39
  than
• 3:40
  anything
• 3:40
  is
• 3:41
  the
• 3:41
  challenge
• 3:41
  that
• 3:42
  Amazon
• 3:42
  has
• 3:42
  in
• 3:42
  front
• 3:43
  of
• 3:43
  them.
• 3:43
  Okay.
• 3:44
  With,
• 3:44
  with
• 3:45
  delivery,
• 3:46
  especially
• 3:46
  as
• 3:46
  they're
• 3:46
  starting
• 3:47
  to
• 3:47
  get
• 3:47
  more
• 3:47
  into
• 3:48
  grocery.
• 3:48
  Because
• 3:48
  if
• 3:48
  Kroger's
• 3:49
  having
• 3:49
  problems
• 3:50
  with
• 3:50
  this
• 3:50
  and
• 3:50
  Kroger
• 3:51
  has
• 3:51
  2,800
• 3:52
  store
• 3:52
  locations
• 3:53
  across
• 3:53
  the
• 3:53
  U.S.
• 3:54
  what
• 3:54
  does
• 3:54
  this
• 3:55
  mean
• 3:55
  for
• 3:55
  the
• 3:55
  continued
• 3:56
  expansion
• 3:56
  of
• 3:57
  Amazon
• 3:57
  with
• 3:57
  no
• 3:58
  stores?
• 3:59
  Yes,
• 3:59
  they
• 3:59
  have
• 3:59
  fulfillment
• 4:00
  centers,
• 4:00
  but
• 4:01
  we're
• 4:01
  seeing
• 4:01
  from
• 4:01
  this
• 4:01
  that
• 4:02
  Kroger
• 4:02
  is
• 4:02
  having
• 4:03
  a
• 4:03
  lot
• 4:03
  of
• 4:03
  difficulty
• 4:04
  with
• 4:04
  these
• 4:04
  fulfillment
• 4:05
  centers.
• 4:05
  How
• 4:05
  is
• 4:06
  Amazon
• 4:06
  going
• 4:06
  to
• 4:06
  do
• 4:06
  this
• 4:07
  better
• 4:07
  with
• 4:07
  no
• 4:08
  physical
• 4:08
  locations?
• 4:09
  Yeah,
• 4:10
  it's
• 4:10
  a
• 4:10
  tough
• 4:10
  challenge.
• 4:10
  I
• 4:10
  mean,
• 4:11
  that
• 4:11
  was
• 4:11
  part
• 4:11
  of
• 4:11
  the,
• 4:11
  that
• 4:12
  was,
• 4:12
  that's
• 4:12
  a
• 4:12
  good
• 4:12
  point
• 4:12
  because
• 4:13
  that
• 4:13
  was
• 4:13
  part
• 4:13
  of
• 4:13
  the
• 4:13
  premise
• 4:14
  of
• 4:14
  these
• 4:14
  Kroger
• 4:14
  fulfillment
• 4:15
  centers
• 4:15
  too,
• 4:15
  is
• 4:15
  that
• 4:15
  they
• 4:15
  could
• 4:16
  go
• 4:16
  into
• 4:16
  markets
• 4:16
  where
• 4:16
  they
• 4:17
  don't
• 4:17
  even
• 4:17
  have
• 4:17
  stores.
• 4:18
  Right.
• 4:18
  And
• 4:19
  see
• 4:19
  and
• 4:19
  get
• 4:19
  them
• 4:19
  to
• 4:19
  work
• 4:20
  and
• 4:20
  get
• 4:20
  them
• 4:20
  to
• 4:20
  deliver
• 4:21
  products.
• 4:21
  And
• 4:21
  it
• 4:22
  doesn't
• 4:22
  seem
• 4:22
  like
• 4:22
  that's
• 4:23
  been
• 4:23
  working
• 4:23
  the
• 4:23
  way
• 4:24
  that
• 4:24
  they
• 4:24
  had
• 4:24
  hoped.
• 4:24
  So
• 4:25
  that's
• 4:25
  an
• 4:25
  interesting
• 4:25
  point.
• 4:26
  Yeah.
• 4:26
  Just
• 4:26
  another
• 4:26
  challenge
• 4:27
  for
• 4:27
  Amazon's
• 4:27
  grocery
• 4:28
  strategy.