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Kroger's $2.6 Billion Automation Retreat | Fast Five Shorts · Omni Talk Retail

• 0:00
  Kroger
• 0:00
  is
• 0:00
  closing
• 0:01
  some
• 0:01
  of
• 0:01
  its
• 0:01
  automated
• 0:02
  fulfillment
• 0:02
  facilities
• 0:03
  to
• 0:03
  bolster
• 0:03
  its
• 0:04
  E
• 0:04
  commerce
• 0:04
  profitability.
• 0:05
  According
• 0:05
  to
• 0:06
  GroceryDive.
• 0:06
  In
• 0:06
  a
• 0:07
  bid
• 0:07
  to
• 0:07
  improve
• 0:07
  digital
• 0:08
  profitability
• 0:08
  by
• 0:09
  $400
• 0:09
  million
• 0:10
  in
• 0:10
  2026,
• 0:11
  the
• 0:12
  grocer
• 0:12
  is
• 0:12
  shuttering
• 0:13
  three
• 0:13
  CFCs
• 0:14
  leaning
• 0:15
  into
• 0:15
  in
• 0:15
  store
• 0:15
  fulfillment
• 0:16
  and
• 0:16
  expanding
• 0:17
  third
• 0:17
  party
• 0:17
  e
• 0:17
  commerce
• 0:18
  partnerships.
• 0:19
  It
• 0:19
  will
• 0:19
  incur
• 0:20
  impairment
• 0:20
  and
• 0:20
  related
• 0:21
  charges
• 0:21
  of
• 0:21
  $2.6
• 0:22
  billion
• 0:23
  in
• 0:23
  fiscal
• 0:23
  Q3
• 0:24
  of
• 0:24
  this
• 0:24
  year
• 0:25
  as
• 0:25
  as
• 0:25
  a
• 0:25
  result
• 0:26
  of
• 0:26
  those
• 0:26
  changes.
• 0:27
  This
• 0:27
  announcement
• 0:28
  comes
• 0:28
  months
• 0:28
  after
• 0:29
  the
• 0:29
  company
• 0:29
  initiated
• 0:30
  a
• 0:30
  quote,
• 0:30
  full
• 0:31
  site
• 0:31
  by
• 0:31
  site
• 0:32
  analysis,
• 0:32
  end
• 0:32
  quote,
• 0:33
  of
• 0:33
  its
• 0:33
  automated
• 0:34
  order
• 0:34
  fulfillment
• 0:35
  network
• 0:35
  in
• 0:35
  an
• 0:36
  effort
• 0:36
  to
• 0:36
  improve
• 0:36
  digital
• 0:37
  profitability.
• 0:37
  Chris,
• 0:38
  do
• 0:38
  you
• 0:38
  agree
• 0:38
  with
• 0:39
  the
• 0:39
  approach
• 0:39
  Kroger
• 0:40
  is
• 0:40
  taking
• 0:40
  here
• 0:40
  in
• 0:41
  shutting
• 0:41
  down
• 0:41
  its
• 0:41
  automation
• 0:42
  facilities?
• 0:43
  On
• 0:43
  the
• 0:43
  whole,
• 0:43
  I'd
• 0:44
  say
• 0:44
  yes.
• 0:44
  Yes,
• 0:44
  I
• 0:44
  agree
• 0:45
  with
• 0:45
  the
• 0:45
  approach.
• 0:46
  You
• 0:46
  know,
• 0:46
  a
• 0:46
  site
• 0:46
  by
• 0:46
  site
• 0:47
  evaluation
• 0:47
  seems
• 0:47
  like
• 0:47
  it
• 0:48
  makes
• 0:48
  sense.
• 0:48
  It
• 0:48
  seems
• 0:48
  like
• 0:48
  it's
• 0:49
  always
• 0:49
  the
• 0:49
  right
• 0:49
  thing
• 0:49
  to
• 0:49
  do.
• 0:50
  And
• 0:51
  what
• 0:51
  people
• 0:51
  have
• 0:51
  always
• 0:51
  said
• 0:52
  is
• 0:52
  that
• 0:52
  the
• 0:52
  sites
• 0:53
  really
• 0:53
  need
• 0:53
  to
• 0:53
  be
• 0:53
  able
• 0:53
  to
• 0:54
  accommodate
• 0:54
  the
• 0:54
  demand.
• 0:55
  And
• 0:55
  you
• 0:55
  look
• 0:55
  at
• 0:55
  the
• 0:55
  sites
• 0:56
  that
• 0:56
  were
• 0:56
  that
• 0:56
  are
• 0:57
  shutting
• 0:57
  down,
• 0:57
  at
• 0:57
  least
• 0:58
  from
• 0:58
  the
• 0:58
  reporting.
• 0:58
  There
• 0:59
  are
• 0:59
  sites
• 0:59
  in
• 0:59
  Wisconsin,
• 1:00
  which
• 1:00
  surprised
• 1:01
  me.
• 1:01
  Maryland,
• 1:02
  Florida,
• 1:03
  where
• 1:03
  Kroger
• 1:04
  doesn't
• 1:04
  even
• 1:04
  have
• 1:04
  a
• 1:05
  presence.
• 1:05
  So
• 1:06
  it's
• 1:06
  no
• 1:06
  surprise
• 1:06
  there.
• 1:07
  When
• 1:07
  you
• 1:07
  step
• 1:07
  back
• 1:07
  and
• 1:07
  you
• 1:07
  say,
• 1:07
  yeah,
• 1:08
  the
• 1:08
  demand's
• 1:08
  probably
• 1:09
  not
• 1:09
  there
• 1:09
  to
• 1:09
  support
• 1:09
  a
• 1:10
  large
• 1:10
  scale
• 1:10
  automated
• 1:11
  fulfillment
• 1:12
  center.
• 1:12
  Now
• 1:13
  there
• 1:13
  are
• 1:13
  two
• 1:14
  things
• 1:14
  about
• 1:14
  the
• 1:14
  headline
• 1:14
  that
• 1:15
  I
• 1:15
  don't
• 1:15
  like.
• 1:15
  Number
• 1:16
  one
• 1:16
  of
• 1:16
  which
• 1:16
  is
• 1:17
  $2.6
• 1:18
  billion
• 1:18
  write
• 1:19
  off
• 1:19
  to
• 1:19
  close
• 1:19
  three
• 1:20
  facilities.
• 1:21
  That
• 1:21
  seems
• 1:22
  like
• 1:22
  a
• 1:22
  hell
• 1:22
  of
• 1:23
  a
• 1:23
  lot
• 1:23
  of
• 1:23
  money.
• 1:24
  And
• 1:24
  so
• 1:24
  you
• 1:24
  have
• 1:24
  to
• 1:24
  ask
• 1:24
  the
• 1:25
  question
• 1:25
  of
• 1:25
  like,
• 1:25
  holy
• 1:26
  cow,
• 1:26
  why
• 1:26
  is
• 1:26
  that?
• 1:27
  Like
• 1:27
  how
• 1:27
  big
• 1:27
  of
• 1:28
  an
• 1:28
  error
• 1:28
  was
• 1:28
  this
• 1:29
  in
• 1:29
  strategy
• 1:30
  from
• 1:30
  the
• 1:30
  get
• 1:30
  go?
• 1:31
  And
• 1:31
  then
• 1:31
  second
• 1:32
  of
• 1:32
  all,
• 1:33
  you
• 1:34
  know,
• 1:34
  you
• 1:34
  have
• 1:34
  to
• 1:34
  question
• 1:34
  like
• 1:35
  the,
• 1:36
  the
• 1:36
  way
• 1:36
  the
• 1:36
  headline
• 1:37
  is
• 1:37
  spinning,
• 1:37
  it
• 1:37
  is
• 1:37
  they're
• 1:38
  going
• 1:38
  to
• 1:38
  really
• 1:38
  rely
• 1:39
  on
• 1:39
  in
• 1:39
  store
• 1:40
  fulfillment,
• 1:40
  you
• 1:41
  know,
• 1:41
  to,
• 1:41
  to
• 1:41
  become
• 1:42
  profitable
• 1:42
  via
• 1:43
  E
• 1:43
  commerce.
• 1:43
  But
• 1:44
  I
• 1:44
  still
• 1:44
  wonder
• 1:44
  if
• 1:44
  there's
• 1:45
  a
• 1:45
  middle
• 1:45
  ground
• 1:45
  there.
• 1:45
  And
• 1:45
  I
• 1:46
  think
• 1:46
  companies
• 1:46
  like
• 1:46
  Voloke,
• 1:47
  which
• 1:48
  is
• 1:48
  spun
• 1:48
  out
• 1:48
  from
• 1:48
  the
• 1:48
  Roller
• 1:49
  group
• 1:49
  and
• 1:49
  they're
• 1:50
  having
• 1:50
  success
• 1:50
  with
• 1:51
  this
• 1:51
  type
• 1:51
  of
• 1:51
  operation
• 1:52
  in
• 1:52
  smaller
• 1:53
  ways
• 1:53
  in
• 1:54
  Europe
• 1:54
  and
• 1:54
  it's
• 1:55
  a
• 1:55
  smaller
• 1:55
  automated
• 1:56
  facility
• 1:56
  approach.
• 1:56
  So
• 1:57
  I
• 1:57
  think,
• 1:57
  I
• 1:57
  think
• 1:58
  the
• 1:58
  industry
• 1:58
  is
• 1:58
  going
• 1:59
  to
• 1:59
  get
• 1:59
  there.
• 1:59
  I
• 1:59
  hope
• 1:59
  Kroger's
• 2:00
  still
• 2:00
  looking
• 2:00
  at
• 2:00
  that
• 2:00
  option.
• 2:01
  My
• 2:01
  guess
• 2:01
  is
• 2:01
  that
• 2:02
  they
• 2:02
  are.
• 2:02
  But
• 2:02
  I
• 2:03
  think
• 2:03
  the
• 2:03
  industry
• 2:03
  just
• 2:03
  needs
• 2:03
  to
• 2:04
  find
• 2:04
  the
• 2:04
  right
• 2:04
  cocktail
• 2:05
  mix
• 2:05
  to
• 2:05
  use
• 2:06
  the
• 2:06
  analog.
• 2:06
  That's
• 2:06
  the
• 2:06
  analogy
• 2:07
  I
• 2:07
  would
• 2:07
  use
• 2:07
  here.
• 2:08
  Yeah,
• 2:08
  I
• 2:09
  agree.
• 2:09
  I
• 2:09
  think,
• 2:10
  you
• 2:10
  know,
• 2:10
  is
• 2:10
  this
• 2:11
  the
• 2:11
  end
• 2:11
  of
• 2:11
  CFCs
• 2:12
  as
• 2:12
  we
• 2:12
  know
• 2:12
  it?
• 2:12
  I
• 2:13
  don't
• 2:13
  think
• 2:13
  so.
• 2:13
  I
• 2:14
  think
• 2:14
  like
• 2:14
  you
• 2:14
  said,
• 2:15
  Kroger
• 2:15
  is
• 2:15
  just
• 2:15
  running
• 2:16
  another
• 2:16
  parallel
• 2:17
  experimen
• 2:17
  experiment
• 2:18
  here
• 2:18
  with
• 2:18
  the
• 2:18
  third
• 2:19
  party
• 2:19
  delivery
• 2:19
  and
• 2:20
  with
• 2:20
  the
• 2:20
  in
• 2:20
  store
• 2:21
  automation
• 2:21
  that
• 2:21
  they
• 2:22
  have.
• 2:22
  As
• 2:22
  Kim
• 2:22
  Beaudry
• 2:23
  we,
• 2:23
  who
• 2:23
  we
• 2:23
  had
• 2:24
  on
• 2:24
  from
• 2:24
  Dematic
• 2:25
  a
• 2:25
  long
• 2:25
  time
• 2:25
  ago
• 2:25
  predicted,
• 2:26
  you
• 2:26
  know,
• 2:27
  this
• 2:27
  is,
• 2:27
  this
• 2:27
  is
• 2:27
  a
• 2:28
  way
• 2:28
  to
• 2:28
  try
• 2:28
  to
• 2:28
  figure
• 2:29
  out
• 2:29
  how
• 2:29
  to
• 2:29
  do
• 2:30
  this
• 2:30
  much
• 2:30
  more
• 2:31
  efficiently
• 2:32
  and
• 2:33
  to
• 2:33
  really
• 2:33
  test
• 2:34
  what
• 2:34
  the
• 2:34
  throughput
• 2:34
  is
• 2:34
  going
• 2:35
  to
• 2:35
  be.
• 2:35
  So
• 2:36
  I
• 2:36
  think,
• 2:37
  I
• 2:37
  think
• 2:37
  while
• 2:38
  it's
• 2:38
  a
• 2:38
  lot
• 2:38
  of
• 2:38
  money
• 2:39
  to
• 2:39
  lose,
• 2:39
  it's
• 2:40
  a
• 2:40
  big
• 2:40
  write
• 2:40
  off.
• 2:41
  I
• 2:41
  do
• 2:42
  think
• 2:42
  that
• 2:42
  it
• 2:42
  makes
• 2:42
  sense
• 2:43
  to,
• 2:43
  to
• 2:43
  start
• 2:44
  to
• 2:44
  pause
• 2:44
  this
• 2:45
  sooner
• 2:45
  rather
• 2:45
  than
• 2:46
  later
• 2:46
  because
• 2:46
  obviously
• 2:47
  there's
• 2:47
  more
• 2:47
  and
• 2:48
  more
• 2:48
  and
• 2:48
  more
• 2:48
  that's
• 2:48
  continuing
• 2:49
  to
• 2:49
  be
• 2:49
  invested
• 2:50
  in
• 2:50
  operating
• 2:50
  these
• 2:50
  CFCs
• 2:51
  the
• 2:51
  way
• 2:51
  that
• 2:51
  they
• 2:51
  are.
• 2:53
  I
• 2:53
  also
• 2:53
  wonder,
• 2:54
  and
• 2:55
  I'm
• 2:55
  curious
• 2:55
  to
• 2:55
  get
• 2:55
  your
• 2:56
  thoughts
• 2:56
  on
• 2:56
  this
• 2:56
  too.
• 2:57
  CFCs
• 2:58
  are
• 2:58
  great
• 2:59
  for
• 3:00
  and,
• 3:00
  and
• 3:00
  even
• 3:01
  automation
• 3:01
  in
• 3:01
  the
• 3:02
  back
• 3:02
  of
• 3:02
  house
• 3:02
  of
• 3:03
  grocery
• 3:03
  stores.
• 3:03
  It's
• 3:04
  great
• 3:04
  when
• 3:04
  you
• 3:04
  have
• 3:04
  center
• 3:05
  store
• 3:05
  items,
• 3:05
  things
• 3:06
  that
• 3:06
  are
• 3:06
  ambient
• 3:06
  temperatures.
• 3:07
  But
• 3:08
  I'm
• 3:08
  curious,
• 3:08
  you
• 3:09
  know,
• 3:09
  what
• 3:09
  does
• 3:10
  the
• 3:10
  cost
• 3:10
  for
• 3:10
  this
• 3:11
  stuff
• 3:11
  look
• 3:11
  like
• 3:11
  and
• 3:12
  the
• 3:12
  layout?
• 3:12
  Because
• 3:13
  you
• 3:13
  and
• 3:13
  I
• 3:13
  have
• 3:13
  been
• 3:13
  in
• 3:13
  several
• 3:13
  of
• 3:14
  these.
• 3:15
  As
• 3:15
  we
• 3:15
  start
• 3:15
  to
• 3:15
  hear
• 3:16
  more
• 3:16
  and
• 3:16
  more
• 3:16
  grocers
• 3:17
  around
• 3:17
  the
• 3:18
  US
• 3:18
  talking
• 3:18
  about
• 3:19
  how
• 3:20
  the
• 3:20
  customer
• 3:20
  is
• 3:21
  looking
• 3:21
  for
• 3:21
  more
• 3:22
  fresh
• 3:22
  product,
• 3:23
  more,
• 3:23
  you
• 3:24
  know,
• 3:24
  more
• 3:24
  refrigerated
• 3:25
  product,
• 3:25
  more
• 3:26
  perishables,
• 3:27
  how
• 3:27
  does
• 3:27
  that
• 3:28
  cost
• 3:28
  impact
• 3:29
  what
• 3:29
  they're
• 3:30
  able
• 3:30
  to
• 3:30
  do
• 3:31
  from
• 3:31
  you
• 3:31
  know,
• 3:31
  picking
• 3:32
  from
• 3:32
  a
• 3:32
  CFC
• 3:33
  or
• 3:33
  from
• 3:33
  an
• 3:33
  automated
• 3:34
  warehouse
• 3:35
  in
• 3:35
  the
• 3:35
  store
• 3:35
  behind
• 3:36
  the
• 3:36
  scenes
• 3:37
  or
• 3:37
  you
• 3:37
  know,
• 3:38
  somebody
• 3:38
  just
• 3:38
  going
• 3:39
  through
• 3:39
  and
• 3:39
  picking
• 3:39
  up
• 3:40
  those
• 3:40
  items
• 3:40
  in
• 3:40
  a
• 3:41
  store
• 3:42
  via
• 3:42
  instacart
• 3:43
  or
• 3:43
  doordash
• 3:44
  like
• 3:44
  Kroger
• 3:44
  is
• 3:44
  doing.
• 3:44
  I'm,
• 3:45
  I'm
• 3:45
  curious
• 3:46
  as
• 3:46
  the,
• 3:46
  the
• 3:46
  product
• 3:47
  set
• 3:47
  starts
• 3:47
  to
• 3:48
  evolve
• 3:48
  in
• 3:49
  what
• 3:49
  customers
• 3:49
  are
• 3:49
  demanding
• 3:50
  of
• 3:50
  their
• 3:50
  grocery
• 3:50
  stores,
• 3:51
  how
• 3:51
  the
• 3:51
  cost
• 3:52
  for
• 3:52
  this
• 3:52
  might
• 3:52
  fluctuate
• 3:53
  because
• 3:53
  more
• 3:54
  things
• 3:54
  are
• 3:54
  requiring
• 3:55
  refrigeration.
• 3:56
  I
• 3:56
  don't
• 3:56
  know
• 3:56
  if
• 3:57
  that's
• 3:57
  coming
• 3:57
  into
• 3:57
  play
• 3:57
  here
• 3:58
  at
• 3:58
  all,
• 3:58
  but.
• 3:58
  Curious
• 3:59
  to
• 3:59
  get
• 3:59
  your
• 3:59
  thoughts
• 3:59
  on
• 3:59
  that,
• 4:00
  Chris?
• 4:00
  Well,
• 4:01
  I
• 4:01
  think
• 4:01
  it's
• 4:01
  always
• 4:01
  in
• 4:01
  play.
• 4:02
  I
• 4:02
  mean
• 4:02
  that's
• 4:02
  the
• 4:02
  tough
• 4:02
  part
• 4:03
  is
• 4:03
  the
• 4:03
  refrigerated
• 4:03
  and
• 4:03
  frozen
• 4:04
  items.
• 4:04
  You
• 4:04
  know,
• 4:04
  being
• 4:05
  able
• 4:05
  to
• 4:05
  pick
• 4:05
  and
• 4:05
  pack
• 4:06
  them
• 4:06
  or
• 4:06
  the
• 4:06
  loose
• 4:06
  items
• 4:06
  is
• 4:07
  always
• 4:07
  the
• 4:07
  right
• 4:07
  challenge
• 4:08
  in
• 4:08
  this.
• 4:09
  And
• 4:09
  you
• 4:09
  know,
• 4:09
  I,
• 4:09
  you
• 4:10
  know
• 4:10
  I
• 4:10
  alluded
• 4:10
  to
• 4:10
  loke
• 4:11
  earlier.
• 4:11
  We're
• 4:11
  going
• 4:11
  to
• 4:11
  have
• 4:12
  their
• 4:12
  CEO
• 4:12
  Richard
• 4:13
  McKenzie
• 4:13
  on
• 4:14
  five
• 4:14
  insightful
• 4:14
  minutes
• 4:15
  with
• 4:15
  us
• 4:15
  hopefully
• 4:15
  here
• 4:16
  upcoming.
• 4:17
  And
• 4:17
  you
• 4:17
  know,
• 4:17
  I
• 4:17
  think
• 4:17
  that's
• 4:18
  a
• 4:18
  question
• 4:18
  we
• 4:18
  should
• 4:18
  ask
• 4:18
  him
• 4:19
  is
• 4:19
  like,
• 4:19
  you
• 4:19
  know,
• 4:19
  how
• 4:19
  do
• 4:19
  you
• 4:19
  think
• 4:20
  about
• 4:20
  this
• 4:20
  now
• 4:20
  but
• 4:20
  also
• 4:21
  in
• 4:21
  the
• 4:21
  context
• 4:21
  of
• 4:22
  how
• 4:22
  the
• 4:22
  grocery
• 4:23
  product
• 4:23
  choices
• 4:24
  are
• 4:24
  evolving
• 4:24
  both
• 4:25
  internationally
• 4:25
  and
• 4:25
  particularly
• 4:26
  here
• 4:26
  in
• 4:26
  the
• 4:26
  United
• 4:26
  States
• 4:27
  with
• 4:27
  GLP1s,
• 4:27
  because
• 4:28
  I
• 4:28
  think
• 4:28
  that's
• 4:28
  what
• 4:28
  you're
• 4:28
  alluding
• 4:29
  to
• 4:29
  here
• 4:29
  in
• 4:29
  terms
• 4:29
  of
• 4:30
  the
• 4:30
  mix
• 4:30
  of
• 4:30
  what
• 4:30
  people
• 4:31
  are
• 4:31
  wanting
• 4:31
  is
• 4:32
  changing
• 4:32
  and
• 4:32
  will
• 4:32
  that
• 4:33
  impact
• 4:33
  the
• 4:34
  eventual
• 4:34
  migration
• 4:35
  and
• 4:36
  cost
• 4:36
  benefit
• 4:36
  analysis
• 4:37
  of
• 4:37
  standards
• 4:37
  standing
• 4:37
  up
• 4:38
  automation
• 4:38
  across
• 4:38
  grocery.
• 4:39
  So
• 4:39
  yeah,
• 4:39
  I
• 4:39
  think
• 4:39
  it's
• 4:40
  an
• 4:40
  interesting
• 4:40
  question.
• 4:40
  We
• 4:40
  should
• 4:40
  keep
• 4:41
  that
• 4:41
  on
• 4:41
  the
• 4:41
  roadmap
• 4:41
  for
• 4:42
  them
• 4:42
  and
• 4:42
  Domatic
• 4:43
  and
• 4:43
  whomever
• 4:43
  else
• 4:44
  we
• 4:44
  have
• 4:44
  gone.