MONROE, Ohio -- A $55 million Kroger investment is bringing the grocery giant’s first customer fulfillment center to Monroe.
Kroger and Ocado, an online supermarket based in the UK, broke ground on the new facility this morning at 6266 Hamilton Lebanon Road. The 400-employee facility is expected to open in 2021. It will serve Kroger customers in the Cincinnati and Dayton areas, using technology that has never been installed in the U.S.
It's the first of three announced sites for the automated warehouse and distribution centers that Kroger and Ocado hope to expand nationally with 20 locations. For months, company officials and industry observers have been calling the project a game changer for Kroger.
Today, executives with both companies explained why they think so.
"Today, most e-commerce grocery orders are assembled by somebody running around the shop and trying to do your shopping. That's not very efficient, leads to a lot of mistakes," said Luke Jenson, CEO of Ocado Solutions. "In one of these facilities we'll be able to assemble a 50-item grocery order in under six minutes with 100 percent accuracy. That will be the point of difference."
Jensen said the 335,000-square-foot warehouse will use "machine learning" to find the fastest path to the item you order.
"When you have a thousand robots all moving within 5 millimeter tolerances of each other, they need to learn all the time what they're doing, how to do it faster, how to do it more efficiently," he said. That includes placing grocery items in the right place "so the robots can access it more effectively."
The robots bring merchandise to picking stations, where humans assemble the order and check it for quality control. Then, orders are loaded onto trucks and vans that deliver merchandise directly to homes, Kroger stores or smaller warehouse facilities where shoppers or delivery drivers can pick them up. Jensen said the 400 jobs expected in Monroe does not include drivers, but the companies have yet to determine how many drivers will be needed. The Monroe employment base will include a healthy contingent of software engineers, although Jensen couldn't say how many.
"You need people to get the box to work," he said. "Bear in mind that the box works for us. We don’t work for the box. So, you always need people to keep them under control, keep them working.”
The technology doesn't end at the warehouse, said Yael Cosset, chief digital officer for the Cincinnati-based grocery chain. The Monroe facility will expand the store shelf for Kroger, making it less likely that an online order requires a substituted product. If the store filling your order is out of the product you want, the Monroe warehouse will look for ways to fill the order.
"If you care about a specific item with a certain expiration date, for example, you will get exactly what you ordered, exactly how you expect it, where and when you want it," Cosset said. "You won’t necessarily have to worry about whether it’s coming from a given store or this facility. We will guarantee the quality of the experience, quality of the product."
Cosset declined to reveal how much of Kroger's grocery volume will be supplied by the fulfillment center, but he did say that he expects the warehouse will not cannibalize existing Kroger stores.
“Every time a customer engages with us digitally," he said, "they actually engage with us in stores more frequently. Because we bring simplicity and a seamless experience to our customers, they bring more of their shopping to us."