The stakes have never been higher for Kroger.
The 135-year-old grocery chain is facing stronger competition than ever before, between Amazon’s foray into groceries with its acquisition of Whole Foods, Walmart’s multi-billion-dollar investments in store remodels and digital grocery services, and the rapid growth of German discount grocers Aldi and Lidl, both of which have upended the UK grocery market over the last decade.
Yael Cosset, 45, is tasked with helping Kroger fend off those threats. He’s currently the head of digital for the grocer, and in May, he will be promoted to chief information officer.
In an interview with Business Insider, Cosset said Kroger is positioned to win the battle for shoppers’ grocery spending because it has a key advantage over all its competitors: nearly two decades of data on its customers’ shopping behavior.
That data, along with Kroger’s network of 2,800 stores and a new partnership with UK technology firm Ocado, are all powering a transformation that will set Kroger on a path to success, Cosset said.
Kroger is the largest conventional grocery store in the US. It has a 9% share of the grocery market, second only to Walmart, which has a 23% share, according to Morgan Stanley.
Kroger now offers grocery delivery or pickup to 91% of its customers from 1,600 stores, and it plans to expand those services to 2,000 stores by the end of 2019.
Kroger has also added in-store digital shelving that can communicate with shoppers’ smartphones, and it’s working with Ocado to open automated warehouses capable of fulfilling a 50-item order within minutes.
Cosset called these warehouses a “total game-changer,” and said that Kroger is working with Ocado on other fulfillment models, as well. The first of the warehouses will open within the next two years.
Kroger isn’t the first grocer to offer pickup and delivery or digital price tags. Walmart, for example, now offers pickup at more than 2,100 stores and delivery from more than 700 stores.
Cosset said that once the Ocado warehouses are open, Kroger will utilize all its physical assets for every order — including stores, distribution centers, and Ocado sheds — to fulfill orders in a way its competitors can’t match.
He called the online fulfillment equation a “balancing act,” which he said is informed by the vast amount of data Kroger collects on shopper activity.
This knowledge gives Kroger an “additional lens” that allows for precise forecasting of demand for online orders, he said.
More robots will be coming to stores
Looking to the future, Cosset said robots and automation will play a bigger role in stores and communicate directly with customers.
Grocery stores could ultimately use video analytics and robots to determines customers’ health and state of mind, and recommend foods to them based on those analyses, he said.
Grocers could use that data to help provide customers with recommendations for certain foods that would help them achieve their objectives, such as reducing stress or getting over the flu, he said.