Ocado Technology Crosses the Pond

Image from Ocado Group's website

Ocado is well-known in the UK for its efficient web -based grocery retailing business. Today, more than half a million consumers shop online at Ocado's e-commerce site and have their groceries delivered.

The company has developed a highly efficient warehouse system that uses robots to pick and pack. See it in operation here.

Now the US supermarket chain Kroger has an exclusive deal with Ocado to build a series of robotic grocery warehouses across America. Ocado's technology will also help Kroger with delivery logistics, a key element.

Currently, Walmart dominates the US grocery business . . . and Amazon's acquisition of Whole Foods Markets turned up the competitive heat last year.

In the long run, Kroger wants to drive down costs and increase efficiency and customer service by transitioning to Ocado's system. Ocado's CEO says the deal with Kroger will "reshape the food retailing industry in the U.S. in the years to come." Meanwhile, how will consumer behavior shape the industry and competition among grocery retailers, online and in stores?

The Food Industry's "Dynamic, Disruptive, and Transformative Time"

Stephen Hughes, CEO of the natural foods firm Boulder Brands, tells Fortune the industry is going through "the most dynamic, disruptive, and transformational time" he's seen during 37 years in the food business.

Boulder owns brands like Smart Balance, Earth Balance, and Glutino. His brands are part of the disruption. Increasingly, consumers are reading food labels with great care and concluding that less is more--less processing, more nutritional value.

Brand trust is vital in this brave new world of fresher, healthier packaged foods. No wonder Heinz is fighting mad over Boulder Brands' plan to put its Smart Balance name on frozen foods. Heinz owns the Smart Ones brand of frozen foods and objects to what it sees as a close similarity of brands that might confuse consumers.

A few months ago, the CEO of Campbell Soup commented on "the mounting distrust of so-called Big Food, the large food companies and legacy brands on which millions of consumers have relied on for so long." Alas for Campbell Soup, sales of its core product are stagnant to slowly dropping. But happily, the company's acquisition of Bolthouse Farms fresh produce and Plum Organics is evidence of its growing experience with trusted natural foods brands.

Interestingly, mainstream supermarket chain Kroger owns what appears to be the largest natural-food brand in the country: Simple Truth, barely 2 years old and already ringing up more than $1.2 billion in annual sales. That's a lot of sales and a lot of brand trust--and a lot of disruption caused by a major retailer that distributes major packaged-foods products.