Kroger confirmed Thursday it will begin testing driverless grocery delivery in suburban Phoenix.
Customers of the supermarket giant’s subsidiary Fry’s in Scottsdale, Arizona will be able to place online orders starting Thursday.
Grocery orders can be scheduled for same-day or next-day delivery though a fleet of self-driving vehicles. The flat fee is $5.95 with no minimum order.
Kroger first announced plans for the delivery test at its June annual shareholder meeting. The vision was for a system where customers will be able to place same-day delivery orders through Kroger’s ClickList ordering system and technology by California-based robotics firm Nuro.
Kroger and rival Walmart Inc (WMT.N) each have teamed up with autonomous vehicle companies in a bid to lower the high-cost of “last-mile” deliveries to customer doorsteps, as online retailer Amazon.com (AMZN.O) rolls out free Whole Foods delivery for subscribers to its Prime perks program.
The first phase of the test will use a fleet of Toyota Prius cars equipped with Nuro technology. Those cars have seats for humans who can override autonomous systems in the event of an error or emergency. Nuro’s R1 driverless delivery van, which has no seats, will begin testing this autumn, the companies said.
“While we compete final certification and testing of the R1, the Prius will be delivering groceries and helping us improve the overall service,” a Nuro spokeswoman said.
Self-driving car delivery from the Fry’s store will cost $5.95 with no minimum order. It is only available at addresses within the store’s zip code of 85257, Kroger said.
Walmart and Alphabet Inc’s (GOOGL.O) self-driving car company Waymo are partnering to test a service that shuttles Phoenix shoppers to stores to collect online grocery orders.
Fourteen months ago, Amazon announced its acquisition of Whole Foods. According to many analysts and pundits, traditional grocers were going to be in big trouble. The online retailing giant would be a fierce price competitor with better technology and a history of destroying margins in the market segments it attacked.
Grocery stocks plummeted on the news, with Kroger leading the way lower falling almost 10% on the day of the Amazon/Whole Foods merger announcement.
Kroger is fighting back
Since the Amazon merger with Whole Foods, Kroger has defended its status as America’s largest grocery chain by investing precisely in the areas that most analysts thought would give Amazon/Whole Foods a big advantage:
“Organic” Growth — Before the merger was even announced, Whole Foods was losing organic food shoppers to Kroger at an alarming rate. By investing in growing its organic offerings, Kroger has undercut one of Whole Foods most compelling competitive advantages. In fact, earlier this year, Kroger announced that it is now generating over $1 billion of annual revenue in its organic producebusiness alone.
Technology — Obviously, Amazon is a technology and online retail behemoth. Injecting that DNA into a grocery chain like Whole Foods is sure to improve both the in-store and online ordering experience for consumers. But Kroger is not just sitting idly, waiting to be passed by.
Photo Credit: Patch