The Kroger Co, Inc. (KR - Free Report) in collaboration with Nuro will launch its driverless grocery delivery pilot program in Houston, following the success of its initial pilot program in Arizona. This move is in sync with the company’s efforts to offer more convenient delivery options to its customers. This service will be available everyday via two Kroger stores located in South Post Oak Road and Buffalo Speedway to customers residing in four zip code areas — 77401, 77096, 77005 and 77025.
Also, this delivery option comes with a flat fee of $5.95, with no restriction on minimum order. Kroger’s customers can shop from either Kroger.com or the Kroger app to avail this service. Once the order is placed, goods will be delivered the same day or next day, per the customer’s convenience based on slot availability.
Customers will be notified when the vehicle arrives at their doorsteps, after which they will have to provide a code to unlock the vehicle and receive their goods. Similar to its pilot program in Arizona, Kroger will start delivering grocery via Nuro’s fleet of autonomous Toyota Priuses and then shift to the latter’s fully autonomous, unmanned R1 vehicles.
Further, Kroger is on track with recruitment in Houston to support this program. Management plans to expand to another market, probably California, by the first half of this year, according to media reports.
In August 2018, Kroger had undertaken this initiative in Scottsdale, AZ, where it used Nuro’s self-driving vehicles to offer grocery delivery services to customers residing in one zip code. As part of the program, both the companies successfully concluded thousands of deliveries in Scottsdale. Encouraged by this, Kroger is expanding its driverless delivery services to multiple cities. Per sources, this move will enable the company to analyze how this new technology fares across several markets and the need to refine the same.
In the wake of the grocery delivery war, Kroger’s rivals — Walmart (WMT - Free Report) and Amazon (AMZN - Free Report) — are ramping up in this space. Early this year, Walmart partnered with autonomous delivery startup, Udelv to launch a pilot program in Arizona. Also, Walmart made yet another move to enhance grocery delivery services by collaborating with Point Pickup, Skipcart, AxleHire and Roadie. Per media reports, Amazon has aced this game, which is apparent from the company’s recent launch of autonomous delivery robot, Scout that to Washington’s Snohomish County.
Kroger, which shares space with Target (TGT - Free Report) has revamped its strategies and now looks forward to combat stiff competition with the help of such innovative delivery options. Prior to this, the company inked a deal with British online grocery delivery company, Ocado that reinforces its position in the online ordering, automated fulfillment and home delivery spaces. Also, the company had earlier entered into a partnership with Walgreens to sell around 2,300 products at 13 Walgreens locations via Kroger Express, a store-in-a-store concept.
Moreover, this Zacks Rank #3 (Hold) company is looking into other growth prospects to generate incremental revenues. In this regard, Kroger has undertaken strategies that include store-base expansion, and introduction of items, digital coupons, and the order online, pick up in store initiative. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In spite of these endeavors, shares of Kroger have plunged roughly 14.4%, against the industry's growth of 7.3% in the past three months. The stock came under pressure following the company’s fourth-quarter fiscal 2018 results, wherein the bottom line not only missed the Zacks Consensus Estimate but also declined year over year. Although total sales topped the consensus mark, it dropped from the year-ago quarter’s figure. Management also provided muted earnings view for fiscal 2019. (Read: Kroger's Q4 Earnings Miss Estimates, FY19 View Soft)
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