Here’s how Kroger is using robots to get groceries to customers’

GROVELAND, Fla.— Inside of a giant warehouse, several hundred robots and Kroger employees are busy preparing online grocery orders.

The country’s largest supermarket operator has opened the automated facilities, called sheds, in Ohio and Florida — and more are on the way. The sheds are the result of Kroger’s deal with British online grocer Ocado to use technology to quickly fill customers’ e-commerce orders and do that in a more profitable way.

One shed is in Monroe, Ohio — close to Kroger’s Cincinnati headquarters — and the other is in Groveland, Florida — a fast-growing city about 30 miles west of Orlando. CNBC had a chance to look inside the facility as it reported on how the grocer is trying to build an online grocery delivery business in Florida, where it has only one store.

For Kroger, the sheds are a huge investment. Each one costs a minimum of $55 million to build. It’s a risky bet, especially when one considers it has to share a portion of each sale with Ocado. To pay off for Kroger, its online business must grow rapidly.

Here’s a closer look at how Kroger is using its Florida shed to get groceries to customers, based on a tour of the facility and interviews with company leaders:

Each shed is stocked with about 31,000 different grocery, personal-care and household items. Trucks pull up to industrial-sized, warehouse doors to unload pallets of cereal, soup, vegetables, packs of paper towels and more. They are ferried by forklift to a decant station.

Once there, employees unwrap the pallets and break down the shipping boxes. They scan and sort items of the same type into plastic totes — almost like stocking a giant, high-tech vending machine.

Key pieces of information about each tote are typed into a computer, including the number of items it contains and product expiration dates. The automated system uses the data to monitor inventory levels and flag products that are at risk of going bad or falling short of Kroger’s standards. (For instance, Kroger guarantees 10 days of freshness for milk.)

Meanwhile, another group of employees load delivery totes with blue plastic bags. These containers will be used to collect items for customer orders.

The engine of each shed is a high-tech grid of roughly 200,000 plastic totes. The totes are stacked on top of one another in rows. Some are full of items that haven’t yet been doled out for a customer, such as loose onions, boxes of Pampers diapers or bags of gummy worms. Others are empty. And a third category is filled with bagged groceries picked out for a customer.

Totes shuffle around like a game of Tetris….