The COVID-19 pandemic has brought big changes to the way people shop. And one of the biggest? A growing number of consumers have turned to the Internet to buy their groceries, going online to purchase everything from milk and eggs to toothpaste, deodorant and shampoo.
Grocers have embraced this change, boosting their online ordering capabilities. But one grocer in particular, Kroger, has made an even bigger move toward automation. The grocery giant in April opened its first automated online customer fulfillment center in the Midwest.
Powered by technology from British online grocery delivery company Ocado, the facility in Monroe, Ohio, relies on artificial intelligence and robotic pickers. Ocado’s automation systems first analyze customer orders, with the bots then picking the items in the most efficient way possible. Kroger delivery people than use mapping technology to deliver these orders using the fastest routes.
Minneapolis-based Ryan Companies played a key role in bringing this fulfillment center online. The Midwest company both designed and built the customer fulfillment center in Monroe. And that’s not the end of Ryan’s involvement: Kroger has hired Ryan Companies to build five of the 10 Ocado-powered customer fulfillment centers that it is bringing online across the United States.
Kyle Schott, Ryan’s director of real estate development based in the firm’s Westmont, Illinois, office, said that that the company’s history played a role in winning this business from Kroger.
As Schott said, Ryan has worked with Kroger on other distribution center projects. Ryan’s success with these projects gave Kroger the confidence that the company would perform well on the Ocado fulfilment center work, too.
“We are strong in design, construction and development,” Schott said. “We take an integrated approach. We’re a one-stop shop, and we’re very expeditious and efficient with our time. Kroger saw that as being advantageous to them. We had established trust with Kroger already in what we can bring to the table.”
The future of grocery shopping?
The customer fulfillment center in Monroe is a good example of what the rest of Kroger’s high-tech facilities will look like. About 90 percent of the center is dedicated to the warehouse/fulfillment center. Half of the building is refrigerated to keep food and perishables fresh. And nearly 400 employees will work at the center.
Ryan is currently design-building a second Ocado-powered fulfillment center for Kroger in Romulus, Michigan. This 130,000-square-foot center is scheduled to be complete in September of 2021.
Designing and building the facility in Monroe was far from a simple task. The biggest challenge? The Ocado system had never been used in this country. Adam Zarek, senior project manager for Ryan on the Monroe customer fulfilment project, said that this required both flexibility and creativity from the construction team.
“The system being used in this building, the robotics, is brand new to the United States. That meant we had to design a building around something that we had never seen here before,” Zarek said. “We worked closely with Ocado to make sure that our model fit with their model. We started construction when the building was just 50 percent designed. We were building it and designing it simultaneously to meet the fast deadlines on this project.”
Ryan began construction of the Monroe facility in June of 2019. The company wrapped construction on Dec. 30 of 2020, and Kroger went live with the facility in April.
Inside the fulfillment center, more than 1,000 robots zip across 3D grids in an area of the facility known as The Hive. The robots pick the products ordered by consumers and drop them in the totes they hold, scouring the warehouse until they have completed their orders.
The bots eventually bring the products to pick stations, where they are sorted for delivery. According to Kroger, the picking stations rely on algorithms so that fragile items are packed on top of heavier ones and the weight of customers’ orders are spread evenly among bags.
The algorithms even ensure that bots use as few bags as possible when putting orders together.
The orders are then loaded into a temperature-controlled delivery van, with each van able to deliver up to 20 orders at a time. Technology plays a role here, too. Machine-learning considers whether roads are closed or traffic is heavy to map out the most efficient delivery routes. Each customer fulfillment center can cover a delivery area of up to 90 miles.
Kroger officials said that the Monroe customer fulfillment center is just the latest step that the grocery chain is taking to boost its ecommerce sales. According to Kroger, the chain racked up more than $10 billion in digital business in 2020.
Kroger has announced plans for 10 customer fulfillment centers. In addition to the Monroe facility, this includes automated buildings in Romulus, Michigan; Pleasant Prairie, Wisconsin; Frederick, Maryland; Groveland, Florida; Forest Park, Georgia; Dallas; and Phoenix. Kroger also has plans for two customer fulfillment centers in unspecified cities in the Pacific Northwest and West.
Schott said that the pandemic has changed the way people shop. And it’s especially changed the way they shop for groceries.
“We are seeing a big change right now in how people order groceries,” Schott said. “We are seeing more of a desire for direct-to-consumer ecommerce. Facilities like this are allowing Kroger to position itself well for that shift that has occurred because of the pandemic.”
Both Zarek and Schott agreed that Ryan’s design-build model played a key role in the successful completion of the Monroe fulfillment center.
“We have this in-house collaboration,” Schott said. “We can work at a quicker speed. Our developers understand what is important to the design team and the construction team. They understand what is important to our property management team. Some clients at first don’t want to put all their eggs in one basket. They see it as a potential risk. But once they’ve gone through it for the first time, they see that we can trim the schedule and the costs with our delivery method. Then they are sold.”
“I don’t see how we could have done this project differently,” Zarek said. “The amount of coordination that had to happen with Kroger, you can’t do that with a third-party architect of record that you have to pass decisions through. It would just be a bottleneck. Our construction team, myself and our other project managers, were in regular meetings with Kroger and Ocado to make sure we were moving in the right direction at all times.”
Zarek said that those who worked on the Monroe project have a sense of pride of the jobs they turned in. This was a first for Ryan Companies, after all.
“It is a landmark project for our team,” Zarek said. “We have done similar projects with automation, but not necessarily in the grocery sector. To see it proceed from start to finish was satisfying. Our design team visited Ocado’s UK facility. We visited another Ocado facility as we were going through the design process. It’s gratifying to see this go from a napkin sketch to an operational facility.”