Kroger’s sheds, which may take up to five years to complete, already give a sense of the emerging grocery battle lines. They will be big, up to about 33,000 square metres (350,000 square feet), though they can be flexed up and down. They will sit on the edge of cities. Ocado aims to make up for the long drives to deliver groceries by speeding up its robots, packing crates of 50 items in six to seven minutes. There will be no time-pressed “pickers” elbowing shoppers aside to fill an online order, as in other supermarkets.
But the Ocado model, which works well in urban Britain, is as yet untested in more sparsely populated places. In America and China others are moving in a different direction—and in a hurry.
In 2017 Amazon sent shivers down American grocers’ spines by buying Whole Foods. On November 11th it confirmed that it was opening its first grocery store in California that is not part of that upscale chain. Last month it launched free delivery of Amazon Fresh, a grocery service, to its Prime members. So far its bark has been worse than its bite. By one estimate only 6% of its sales are perishables, compared with 65% at a traditional grocer.
Amazon’s domestic rivals are making existing supermarkets the kernel of their online operations, either for picking up orders or delivering them. Close by will be micro-fulfilment centres, which will seek to emulate Ocado’s efficiency, but cut down on travel times. The model is Walmart, which cited sharp growth in online grocery from its supercentres in America as a reason for higher sales this summer. Last month it launched a service in which employees in three American cities can deliver groceries directly to customers’ fridges when no one is home, using smart-entry technology and wearable cameras. It also promises same-day delivery under a membership programme like Amazon Prime.
Alibaba’s high-tech Hema supermarkets in China are more cutting- edge still. They use QR codes on fish to validate freshness, enable app-based shopping, have robots aplenty (naturally) and offer 30-minute delivery within a small radius. Yet it is unclear if Hema’s technology will succeed where armies of cheap labour, ready to sort, pick and deliver groceries, have mostly failed.
No one has as yet quite cracked the problem. More wizardry, perhaps virtual-reality headsets, may be required to make internet grocery shopping as intuitive for people as it is offline. But the incentives for grocers to press ahead are huge. No relationship in retail is as intense as that of shoppers with their supermarket. Few firms have as many eggs in the online-shopping basket as Ocado. If things do not work out, at least the Kroger deal has made Mr Steiner a rich man. If they do, he may be a rare example of a British entrepreneur with global ambitions who is not off his trolley.