What Kroger, Walmart, Target learned from China about grocery’s

Now going on 140 years in business, Cincinnati-based Kroger sped up its push into digital retailing during the pandemic, and grocery store chain isn’t looking back.      

Kroger has adopted an omnichannel strategy, integration of offline or in-store sales with online orders and logistics. It’s a concept that originated in China in 2016 when founder Jack Ma of e-commerce giant Alibaba coined the term “New Retail” and proceeded to open 300 high-tech Freshippo-branded supermarkets in 27 Chinese cities.

This “New Retail” model has been “cut and pasted from businesses that worked in China,” said Michael Zakkour, founder of digital commerce and retail consultancy 5 New Digital in New York. “We are seeing it with Kroger, Target and Walmart. They looked at the New Retail model born in China for complete integration of offline and online channels,” he said. “Same-day delivery, restaurants in store, app-driven sales and QR codes are all bright spots in every single one of them, and all happened first in China.”

At first, the highly competitive and fragmented U.S. food retailing business was slow to catch on. But the action was jumpstarted when Amazon bought Whole Foods Market in 2017 and began introducing several advanced technologies to streamline in-store shopping, a shift that also spread to large retailers Walmart and Target.

“You just can’t be a 1990s grocer. You have to be courageous, break things, and quickly adapt,” said Yael Cosset, senior vice president and chief information officer at Kroger, who is leading its tech and digital initiatives. In a nod to Alibaba, he said the Chinese e-commerce company “has done a fantastic job in reinventing the retail model, a convergence of brick and mortar with e-commerce in an online and offline world.”

Cosset has been spearheading introduction of the omnichannel shopping experience. Kroger’s new retailing links together shopping, e-commerce and logistics: automated fulfillment centers bag groceries; vans make same-day deliveries to households; data analytics provide an early read on customer trends; mobile apps distribute customer promotions and coupons; on-premise “ghost kitchens” prepare meals for in-store pickup or van delivery; QR codes handle payments online at self check-outs; and large online fulfillment centers and warehouses rely on robots for packing, sorting and loading orders.

New automated fulfillment centers are a critical part of the technology effort. These centers use AI and robotics to replace labor-intensive work of sorting and bagging groceries for delivery, while on-site employees handle such operations as engineering and inventory management.

“When you look at retail, there are two big enablers: tech and data science, and secondly, supply chain logistics and fulfillment,” Zakkour said. “The lesson that…