Kroger’s autonomous delivery cars latest salvo in Houston grocery wars

Kroger, the nation’s largest grocer, has launched a self-driving grocery delivery service in Houston, the latest salvo in a hyper-competitive grocery market that has supermarket chains investing heavily in new technology to win over online shoppers.

Company officials on Tuesday showcased the first of dozens of autonomous delivery vehicles planned for Houston: Toyota Priuses outfitted with cameras, sensors and self-driving computer software. Shoppers at Kroger’s Meyerland store who live in ZIP codes 77401 and 77096 can order groceries through the company’s website and have their purchases pull up in a self-driven Prius. The Cincinnati-based grocer plans to bring the autonomous delivery service to its Buffalo Speedway store later this year, with plans to ultimately expand the program citywide.

“We are creating a seamless shopping experience for our customers so they can get anything, anytime and anywhere,” said Marlene Stewart, Kroger’s Houston division president.

The introduction of autonomous delivery vehicles ups the ante in Houston’s fierce grocery wars, which has only intensified after technology and e-commerce giant Amazon bought Austin-based Whole Foods in 2017. The $13.7 billion acquisition sent shockwaves throughout the grocery business, prompting competitors such as Walmart, H-E-B and Kroger to engage in a fierce technological arms race to offer ever more convenient grocery pickup and delivery options to draw shoppers.

“The grocery business is so competitive, everybody is fighting for their market share,” said Ed Wulfe, chief executive of Houston-based retail brokerage Wulfe & Co. “They’re always looking for something that gives them an edge over their competition.”

Walmart, the nation’s largest retailer, last year began delivering groceries in the Houston area and is running several autonomous vehicle pilot programs with plans to bring the technology to the Bayou City. The Bentonville, Ark.-based company recently announced plans to deploy autonomous robots at several local stores to scrub floors, scan shelves and unload delivery trucks.

H-E-B, the Texas grocery heavyweight, last year acquired Favor, an Austin-based food delivery company. The San Antonio chain, which is building a technology and innovation hub in Austin, offers online ordering for home delivery at 48 stores in the Houston area and is piloting a self-checkout mobile app at several Texas stores.

Looking ahead

Kroger, one of the first grocers to offer grocery pickup and delivery in Houston, has embraced e-commerce and new technologies. The company last year launched its “Scan, Bag and Go” technology in the Houston area, allowing customers to use a wireless handheld scanner or a smartphone to scan and bag groceries as they shop in the store. It also struck a deal with U.K.-based technology company Ocado to use automated robots to pick, sort and pack online grocery orders in distribution centers.

In January 2018, Kroger partnered with Nuro, a Mountain View, Calif.-based self-driving delivery startup, to develop a grocery delivery service. Nuro, founded in 2016 by a pair of Google veterans, has raised $1 billion from investors, including Silicon Valley venture capital firm Greylock Partners and Japanese holding conglomerate SoftBank, to make autonomous vehicle deliveries affordable for the mass consumer.

“We believe this technology isn’t just for an elite group of people, but for everybody,” said Dan Mitchell, Nuro’s head of product operations and community engagement.

The Kroger-Nuro partnership launched a pilot program in Scottsdale, Ariz., in August. Over the next seven months, the companies made more than 2,000 deliveries to customers living in one ZIP code around a Fry’s Market, a Kroger subsidiary. Mitchell said the autonomous vehicles were well-received in Arizona, with shoppers reveling in the novelty of self-driving cars by taking photos and sharing them on social media.

Deliveries cost $5.95 per order. Customers using the autonomous vehicle delivery service will have to pick up their groceries from the vehicle curbside, notified of their arrival via text message.

Nuro’s autonomous vehicles will have a safety operator at the driver’s seat who can take control in case of emergencies, as well as a co-pilot monitoring the technology. The vehicles had no accidents during its Arizona pilot program, Mitchell said.

Quincy Allen, district engineer for the Texas Department of Transportation, said governmental agencies will closely watch Kroger’s autonomous delivery program as it expands.

“Safety remains our top priority, and we expect Kroger and Nuro to meet our safety standards,” Allen said.