What Is The Right Grocery Investment Strategy For Retailers?
Kroger is opening its first automated Ocado facility. The big question is - at 350k sqft a pop, is it the truly right investment?
Who will make more money here? Ocado surely. I just can't work out how Kroger will make it up in volume on 20 $55M facilities. That is a lot of automation WITHIN the facility? What about when it leaves the facility? Are you discouraging curbside and store employee utilization? Will these massive facilities just become a fun back-end for Instacart?
Target has already paved the way here folks. Invest in stores, not in these massive separate facilities. I can't even work out when they last added a store greater than 40k sqft - optimizing the deployment of inventory closer to consumers and creating a Target brand experience. These automated facilities do neither of these.
Walmart I think is (smartly) trying to thread the needle between the Target strategy and the Kroger strategy - micro fulfillment attached to the store, not in a centralized facility. The big question with Walmart, is their pace of innovation - can it be done in time?