The Friday Checkout: Can Kroger's New E-Commerce Chief Untangle Its Complex Online Operations?

The Friday Checkout is a weekly column providing more insight on the news, rounding up the announcements you may have missed and sharing what’s to come.

Kroger CEO Greg Foran has spent the early months of his tenure emphasizing improvements to the supermarket chain’s core operations — specifically, lowering prices and enhancing execution in fresh departments. However, the company cannot afford to neglect an e-commerce business that has become increasingly convoluted in recent years.

Kroger’s proprietary delivery service, launched several years ago as a harbinger of online grocery’s future, now appears to be losing touch with market realities. The service relies on large, automated fulfillment centers built by British technology firm Ocado, which carry significant operational costs at a time when efficiency is paramount for retailers. Moreover, its slower fulfillment speeds compared to third-party delivery platforms like Instacart and DoorDash do not align with consumer expectations for rapid delivery.

Nate Faust, Kroger’s newly appointed chief e-commerce officer, inherits the task of resolving this expensive dilemma. As the founder of two online services — Jet.com and Olive — Faust brings a consumer-centric perspective and a comprehensive understanding of e-commerce operations. As an external hire, he can offer fresh insights into the Ocado network and assess whether it aligns with Kroger’s evolving strategy. Faust also possesses deep logistics expertise, having served as Walmart’s SVP of e-commerce supply chain following the retailer’s $3.3 billion acquisition of Jet, which positions him well to evaluate Kroger’s delivery infrastructure.

Over the past two years, Kroger has closed several facilities in its e-commerce fulfillment network, and further closures may be necessary as Ocado’s delivery systems face global challenges and as fulfillment increasingly shifts to store-based models. Canadian grocer Sobeys announced earlier this year that it would close an automated facility in Calgary that was yielding underwhelming returns. Ocado’s own online grocery business in the U.K. is also struggling against rapid delivery firms.

For Kroger, e-commerce remains a vital component of a flywheel that includes retail media and in-store sales. To compete effectively with major players like Walmart and Amazon, the company must streamline its overly complex digital operations.

In case you missed it

Another Meijer Grocery gets ready to open

The store in Fishers, Indiana, will open Sept. 30, according to Meijer. Once this 75,000-square-foot location goes live, it will mark the second Meijer Grocery in Indiana and the sixth under the banner, which debuted at the end of 2023.

H Mart goes for seconds with Orlando food hall

The Asian grocery chain plans to open an extension of its food hall at its store in Orlando, Florida, next Friday. The food hall, which opened last year along with the store, will add six new dining stalls, including a Japanese curry option and several Korean choices.

How did July’s inflation fare?

Food-at-home prices rose at a 2.7% annual clip in July — the same pace as in June and May — according to Consumer Price Index data released this week by the U.S. Bureau of Labor Statistics. Meanwhile, overall inflation hiked up 3.4% in July.

Impulse find

Giant Eagle makes a statement with mega-sized shopping cart

Some grocers choose to make a statement by naming autonomous aisle-roaming robots as their unofficial mascots. Giant Eagle has decided to go bigger with its “Giant Buggy” — a massive, motorized shopping cart.

The Giant Buggy hit the streets earlier this month around the chain’s two newly remodeled stores in Cranberry Township and West View, Pennsylvania, the grocer said in an emailed announcement. Those upgrades are part of a larger remodeling initiative that Giant Eagle said aims to “reinforce its position as a leading grocer in the Pittsburgh region.”