US supermarket giant Kroger is stepping up its investment in digital technologies to improve inventory management, streamline store operations and increase product availability. By combining radio-frequency identification (RFID), computer vision, digital shelf labels, robotics and artificial intelligence, the retailer is working to make its supply chain more responsive while reducing operational costs.
The company outlined these initiatives during its analyst and investor day conference on October 20. Among the measures presented, Kroger is sharing computer vision data with suppliers to help them identify gaps in product availability, make better-informed decisions and ultimately increase sales. At the same time, the retailer is testing RFID technology across the bakery departments of approximately 1,500 stores.
Mark Ibbotson, Kroger’s executive vice president and chief store operations officer, explained that access to more reliable data allows the company and its supplier partners to respond more quickly to changing conditions and take more targeted action.
For CEO Gregory Foran, the broader objective is to eliminate unnecessary costs and operational complexity, redirect savings towards customer value and better execution, and gradually improve the company’s margins.
RFID pilot shows measurable operational improvements
Kroger’s early RFID results show improved inventory accuracy and waste reduction. The technology has a 98% read rate, which is the percentage of items that it can successfully detect and identify. We’ve seen inventory counts speed up almost 70% and waste drop by 50%.
Based on these results, Kroger plans to roll out RFID to over 2,300 stores by 2029.
Besides faster stocktaking, the technology is expected to give employees better insight into individual products, and support more efficient replenishment and production planning. Ibbotson said reliable information at the item level will help the retailer make better decisions about replenishment, markdowns and fresh-food management for more categories of products.
Better data and more efficient store routines should reduce the need for counting, limit waste, improve shelf availability and generate more sales.
AI connects inventory, sales and product movement data
Kroger is also increasing its use of artificial intelligence to detect supply chain risks sooner. The retailer uses RFID signals, along with sales, inventory and sell-through data, to identify potential problems before they affect store operations or product availability.
Its AI tool connects to up to 20 data pipelines and gives visibility to the individual item at each store. Such granularity enables the company to make better operational decisions and to improve its planning processes over time.
The results of each operational event, Ibbotson said, were important to better inform future decisions. The analysis post an event provides valuable knowledge to guide future buying decisions, product allocation and execution strategies. This creates a continuous improvement loop where improved information leads to improved action and more reliable data.
*Image suggestion: Insert a table/visual here showing results of Kroger’s RFID pilot. Between the implementation of the technology and the section on AI-enabled inventory management.
New Automated Facility Planned for Kentucky
Kroger is also investing in technology at the store level as it expands its distribution infrastructure.
“Our supply chain investments are targeted to drive productivity gains and create capacity to support new store openings and growing e-commerce demand,” said David Kennerley, executive vise president and chief financial officer.
One of the ongoing projects is an automated facility in Franklin, Ky. The site will serve Kroger’s Nashville, Tenn., and Louisville, Ky., divisions and is expected to be complete in 2028.
The investment is part of the retailer’s wider effort to improve its logistics network and bolster its capacity to meet future demand. But Kroger’s experience also demonstrates that automation projects don’t always deliver the expected results.
Kroger to review partnership with Ocado
The retailer has scaled back its partnership with technology developer Ocado, which specializes in automated grocery fulfillment systems. Kroger reviewed the performance of the fulfillment centers with robots to determine if they were meeting the company’s operational benchmarks.
That reassessment led to a scaling back of its commitment to the partnership. Kroger also scrapped plans last year for an automated e-commerce fulfillment center in North Carolina that it had built with Ocado. Additionally, a Tennessee facility was set to close earlier this year.
Such decisions underline the challenges retailers have to balance investment in automation against operational performance and commercial requirements.
Kroger’s strategy now is more about driving measurable productivity improvements, getting better inventory data and using technology that directly improves store execution. The company is looking to use RFID, computer vision and AI to improve product availability, reduce waste and control costs, and get the supply chain ready for growth.
