As online shopping soars, US grocery chain experiments with automated pickup kiosks

The code on a customer's phone during pickup at Chicago's South Loop Jewel-Osco. The grocery chain is testing an automated pickup kiosk in Chicago's South Loop, a first for an American grocer. — Chicago Tribune/TNS

A Jewel-Osco store in Chicago is the first grocery in the nation to pilot an automated pickup kiosk, one of numerous investments grocers are making to prepare for a future of more online shopping.

The kiosk, located in the store parking lot, is meant to offer a convenient and contact-free option for online shoppers to collect their groceries. Shoppers are asked to select a two-hour pickup window, and when they arrive they scan a code and their items are delivered robotically, according to the company.

Employees shop the store to fill customers’ orders and put them into the kiosk for pickup. The kiosk, made by Estonia-based Cleveron, has a refrigerated and deep freeze zone so ice cream can be picked up at the same console as bananas.

Jewel-Osco parent Albertsons plans to install a second kiosk at a Safeway in the San Francisco Bay Area, but has not announced plans for a wider rollout.

“We are supercharging our digital and omnichannel offerings to serve customers however they want, whenever they want,” Chris Rupp, executive vice president and chief customer and digital officer at Albertsons, said in a news release.

Albertsons, the third-largest grocery chain in the US, has been testing various ways to streamline pickup and delivery as e-commerce becomes a bigger part of its business, driven in part by the pandemic as people avoided going out in public. Digital sales grew 225% during the third quarter ended Dec 5, compared with the same period the year before, according to company earnings released last week.

The company, headquartered in Boise, Idaho, recently announced it will transition to third-party delivery in some markets, including Chicago, where its Jewel-Osco brand is the Chicago area’s largest grocery chain by store count, and California. The announcement came shortly after California voters approved Proposition 22, which exempts gig economy companies like DoorDash from a state labour law that would have forced them to employ drivers and pay for health care, unemployment insurance and other benefits.

Jewel-Osco, which until now has used a combination of in-house drivers and DoorDash for delivery, said that next month it will stop using its own fleet and transition entirely to third-party providers to “help us create a more efficient operation and compete more effectively in the growing home delivery market”.

Jewel-Osco also offers a Drive Up and Go curbside pickup service and in October installed temperature-controlled pickup lockers, made by Bell & Howell, in two Chicago stores.

Other grocery chains also are experimenting with new technologies. Walmart, the nation’s largest food retailer, last week announced it will test temperature-controlled smart coolers that can be placed outside of customers’ homes so their groceries can be delivered at any time. The service, called HomeValet, will be piloted this spring in its hometown of Bentonville, Ark.

Kroger, the nation’s second-largest grocery chain, is building automated fulfillment centers, in partnership with UK-based Ocado, to make online fulfillment more efficient. Its digital sales grew 108% in the third quarter that ended Sept 30, and online orders were profitable, company executives said on the earnings call. The company expects online orders to continue to perform well because of lowered costs to fulfill the orders and personalisation technology that helps drive ad revenue and encourages people to buy more.

Improving the curbside pickup experience has been a priority for retailers as shoppers find they like the convenience of not having to get out of their cars. Target has been adding drive-up pickup spots to more stores and expanding the service to include more fresh and frozen foods.

The Fresh Market is trying to set itself apart by billing its service as the “friendliest curbside experience in America”, with orders double-checked and verified by managers, wait times under five minutes and a customer satisfaction guarantee. The North Carolina-based grocer plans to have its personal shoppers bring out water to waiting customers on hot days and over Christmas had costumed Santas bring out groceries. – Chicago Tribune/Tribune News Service

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