A retail technology tsunami is about to hit the grocery sector as Amazon, Walmart et al think big
Last week, shares of British online grocer and technology specialist Ocado Group soared more than 40% Thursday after The Times newspaper reported “speculation of bid interest from more than one American suitor.”
Said report named Amazon as one of several players that could have Ocado on their radars.
Why would Amazon be interested? Technology, according to Brittain Ladd, a supply chain consultant and former Amazon executive.
In a LinkedIn post, he said: “Kroger has a partnership with Ocado and is planning on opening 20 Ocado Customer Fulfillment Centres. (I have a hard time believing that Kroger would allow Amazon to acquire Ocado, its most strategic partner.)”
He added: “My sources at Amazon have told me that the company is evaluating "many options" including possible acquisitions. Sources from Ocado told me, we are in discussions with several companies interested in acquiring us."
H-E-B, meanwhile, has opened what is pitched as the world's most advanced in-store micro-fulfilment centre (MFC) powered by AutoStore at a location in Plano, Texas. What makes the store so advanced? Technology.
Walmart has opened its second store with a MFC inside powered by Alert Innovation. Walmart acquired Alert Innovation in 2022. Why? Yep, you guessed it, technology.
Kroger appears to be on a path to receive approval to acquire Albertsons.
It will expand the use of Ocado's CFCs across the Albertsons network. It's possible that within a few years, Kroger will operate 30 or more CFCs capable of fulfilling orders in minutes primarily through the use of robotics and software.
Ladd commented: “The reason why it's plausible that Amazon would be interested in acquiring Ocado is to deprive Kroger of opening CFCs and gaining a competitive advantage through technology.”
“However, I'm not convinced that an acquisition of Ocado is the best choice for Amazon. Instead, I believe it should move ahead with its 'Mothership' strategy of opening massive (up to four million square feet) heavily automated grocery fulfilment centres to self-fulfil groceries to Whole Foods Market stores. (Yes, Amazon could acquire UNFI).”
“The project has stalled because Amazon won't open additional stores across the US until it finds a format it can scale. It's possible that Amazon chooses not to build but instead buy stores hence the reason I've recommended that it should acquire Trader Joe’s.”
Amazon is testing multiple solutions for automating grocery fulfilment. It is also evaluating different store formats that can leverage robotics inside the stores for this.
Ladd concluded: “I’m convinced that Amazon is working closely behind the scenes with Fulfil to determine if its robotic fulfilment technology is the best choice for Amazon to use inside stores.”
“A technology tsunami is about to hit the grocery industry that will put independent and regional grocers at a disadvantage. With online grocery orders reaching 15% of sales by 2025 to 2028, I anticipate that many retailers will choose to outsource their online business to Instacart, Shipt etc.”
“Third parties won’t fulfil orders, they’ll operate as grocery retailers.”
Continue reading…