Kroger, partnering with Ocado, starts online grocery deliveries in Florida
Kroger Co. has officially arrived in the Tampa Bay region.
The Cincinnati-based grocery giant, rumored for years to be considering an expansion into the Sunshine State, is offering grocery delivery in Tampa. Its warehouse here is described in job listings as a "spoke" and an "exciting arm" of Kroger's massive new customer fulfillment center in Groveland, which is near Orlando.
That Orlando warehouse is a partnership with British e-commerce giant Ocado. It began delivering groceries in Central Florida in early April; the Tampa warehouse, the company says in job postings, will "deliver Kroger Fresh products to the coast."
Kroger's customer fulfillment centers offer delivery within a 90-mile radius, the grocer said when its first facility opened near its hometown of Cincinnati in mid-April.
Refrigerated delivery trucks emblazoned with Kroger's logo and offering delivery via Kroger.com were seen throughout downtown Tampa's Channel district and Ybor City on Saturday ahead of Tampa Pride. Kroger is a "Swashbuckler" level sponsor of the parade — at a cost of $5,000 — and tote bags advertising Kroger delivery were handed out to paradegoers.
"I can confirm that we've commenced deliveries in Tampa," a Kroger spokeswoman wrote in an email Sunday.
Kroger's entrance to the Florida market as an e-commerce company — not a traditional brick-and-mortar grocery store — is a major statement from the chain. It signals that Kroger sees a profitable future for online grocery shopping and that it doesn't see a need to compete with Lakeland-based Publix Super Markets Inc. for prime retail real estate.
Online sales are still a small fraction of overall grocery sales, though the novel coronavirus pandemic saw sales jump in 2020. Online grocery sales skyrocketed 54 percent last year, according to Chain Store Age, and while some customers will return to the stores post-pandemic, many will continue to order online. Online grocery sales are forecasted to hit $100 billion for the first time in 2021, Chain Store Age reported.
Kroger's digital business soared to more than $10 billion in 2020 for a record digital sales increase of 116 percent.
"We're incredibly proud to achieve this milestone that advances our position as one of America's leading e-commerce companies," Rodney McMullen, Kroger's chairman and CEO, said when the Cincinnati facility opened. "The momentum we're experiencing is well-timed with the evolution of Kroger Delivery, underpinning the permanent shift in grocery consumer behavior and need for enterprising and modern e-commerce and last-mile solutions — today's true competitive horsepower."
Publix enjoys a cult following in its home state and has long been cited as a reason that Kroger hasn't ventured into Florida, though the two chains do compete in metro Atlanta and the Carolinas. Kroger was a major backer of specialty grocer Lucky's Market, which was expanding in Florida until Kroger divested from the chain in late 2019.
And while Publix still touts its in-store experience, the company has been steadily ramping up its online offerings. It entered a "collaboration" with app-based delivery service Instacart several years ago to offer delivery from all 1,200 stores.
But Kroger isn't just competing with Publix for grocery share in the Tampa market. Amazon rolled out Amazon Fresh delivery here in late 2019, and other national chains have significantly upped their online offerings in recent years. Walmart Inc., which is Publix's biggest competitor in Florida, has spent hundreds of millions of dollars building out a supply chain that uses its stores to fulfill online grocery orders.
An unconfirmed recent report suggests a response of sorts could come in the form of an expanded partnership between third-party delivery apps and retailers. The HNGRY blog last week said that Instacart and Publix were working together on a plan to test fulfillment from a dark store and a forthcoming automated microfulfillment center to be operated by Fabric. The report, which did not identify locations for the facilities, was said to be based on an internal Instacart memo obtained by HNGRY. Neither Publix nor Instacart responded to WGB’s requests for comment. A Fabric representative and a consultant cited in the HNGRY story declined to comment.
Kroger has entered Florida with home delivery in Tampa and Orlando thanks to its new Ocado customer fulfillment center opening there. https://t.co/um6xu4v5CD
— Cincinnati Business Courier (@BusinessCourier) May 24, 2021
Instacart had previously acknowledged it was seeking technology partners in service of retail partners. Sources told WGB earlier this year that the San Francisco tech company was relying in part on the counsel of Mark Ibbotson, a former top technology executive at Walmart, as it evaluated options.
