Kroger Starts Home Delivery: Should Real Estate Investment Trusts Be Happy?

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Kroger is now starting a takeover showcase of Amazon Walmart and other fierce competitors in the fast-growing online grocery delivery business.

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The company’s new service relies on robots doing their job in highly automated warehouses, starting with a 375,000-square-foot facility already launched about 30 miles north of Kroger’s headquarters in Cincinnati, and on Kroger employees making their own deliveries. “It’s another piece – an important piece to serve our customers wherever they want, whenever they want,” says Rodney MacMullen, Kroger’s chief executive, in an article published today by The Enquirer after he toured the facility.

This warehouse is expected to handle thousands of digital orders daily for delivery to consumers in markets stretching from Cincinnati to nearby Dayton, Ohio, and to Louisville, Kentucky and Indianapolis. The Enquirer says the $ 55 million facility, which has been in test mode for the past month, will be the hub for speaking operations to be set up in those cities, and a similar flexible opening is underway in Orlando, Florida, a suburb of Groveland, in a warehouse of Expected to serve as a hub for delivery to markets from Tampa to Miami. Also on the drawing board are warehouses in Atlanta; Dallas. Frederick, Maryland; Phoenix. Pleasant Prairie, Wisconsin; And Romulus, Detroit, Michigan.

The Enquirer says Kroger is also looking at locations in the Pacific Northwest and Western states, and as the network expands, Kroger will announce additional locations. Kroger announced for the first time in 2018 that it had partnered with Ocado (OTCMKTS: OCDDY), a British digital-only retailer, to ramp up a network of 20 automated warehouses in this side of the pond. The investment extends to people, too. Kroger says it will make its own deliveries, bypassing Instacart and the like, to benefit company employees in the Kroger-branded trucks, which it says will help ensure consistency and reliability. The company is also considering cutting delivery charges of $ 9.95 for deliveries ordered in advance a few days in advance, says The Enquirer. And those pivot warehouses and smaller amplifiers? These could be the prime properties of the future for industrial REITs and local developers. One might also wonder if doing too much of the warehouse would break up the company’s stores, but my intuition is probably not much. People love to shop by themselves when they can, as we recently covered in this: “Instacart says online grocery shopping isn’t just a trend.” What is your take on this? Let us know in the comment section below!

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