Is that a Robot on Isle 9?

Is that a Robot on Isle 9?

We’ve all heard endlessly about the death of brick and mortar, (we discuss how that death is overstated in our podcast with Katherine Cullen of the National Retail Federation next week) as online retailing continues to gain market share and is nearly equal that of brick and mortar as a percent of consumers’ spending. While online retailing has made enormous gains, brick and mortar is far from dead, but rather is evolving and disruptive technologies are part of that evolution, even in your local grocery store. A recent Wall Street Journal article revealed that an enormous amount of capital is being invested in improving the way the grocery industry operated, (emphasis mine).

Grocers are stocking their warehouses with robots and artificial intelligence to increase efficiency as competition for consumer spending on food picks up. Robots are relatively new to the food industry, where customer interaction is common and many goods like fruit are fragile and perishable. Startups are vying to sell supermarkets an array of robots that perform different tasks. Venture-capital firms have invested more than $1.2 billion in grocery technology this year, according to PitchBook, a financial-market data provider, double the total for 2017.

Online groceries retailing has been a relatively weak area for growth in online retail, despite the early efforts of now-defunct Webvan and HomeGrocer. But that looks like it will be changing as investments in disruptive technologies are increasing.

Altogether, spending on technology by many of the biggest U.S. food retailers could accelerate the adoption of online ordering for groceries. Deutsche Bank expects online orders to represent roughly 10% of the $800 billion grocery market by 2023, up from 3% today.

Learning from those who tried in the early dotcom era and failed, the WSJ article reports that according to Narayan Iyengar, senior vice president at Albertsons Cos., the second-biggest U.S. supermarket chain,

“We have to find a model where we can deliver groceries to customers’ homes and do it in a more profitable way,”

Beyond robotics, companies like Kroger are also getting into delivery.

Kroger also is testing a driverless grocery van with autonomous vehicle company Nuro Inc., and it entered the crowded meal-kit distribution market through a $700 million deal with startup Home Chef. The deals are expected to advance Kroger’s online prowess, but have hurt the company’s profits and weighed on recent earnings.

The bottom line is those disruptive technologies can and have upended all aspects of our lives. Our Disruptive Technology investing theme focuses on those companies providing the technologies that completely change the way we communicate, shop, eat, work, exercise and even play.

Source: Grocers Enlist Robots to Chase E-Commerce – WSJ

Kroger going the way of the Jetsons with robots

Kroger going the way of the Jetsons with robots

One of our investing themes is focused on Disruptive Innovators, those companies that are utterly upending the way the world works. This week we saw more signals concerning the major changes taking place in an industry infamous for its brutally low margins, grocery stores…. and it entails robots.

Kroger (KR) is working on improving its operations, and defending itself against Tematica Research all-star Amazon (AMZN), which in turn ought to translate into better cost management by replacing people with robots – a trend that is occurring across a wide range of industries and geographies. A recent article on Reuters reported that

Through the deal with its largest partner, Ocado will ratchet up its delivery business by building robotically operated warehouses for Kroger in the United States, raising the stakes in the battle with Amazon.com Inc. The Kroger deal is Ocado’s biggest yet, exceeding all of the warehouses the firm has built or plans to build with Morrisons in Britain, Casino in France, Sobeys in Canada and ICA Group in Sweden. … Kroger is expected to order 20 CFCs over the first three years of the agreement. Ocado shares rose as much as 6 percent on Tuesday, taking gains over the last year to 195 percent.

Source: Kroger set to place warehouse order with partner Ocado

Ep 58: Why Boxed is a Takeout Candidate

Ep 58: Why Boxed is a Takeout Candidate

 

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Amid the ups and downs of the stock market, it comes as little surprise to us here at Tematica that thematically well-positioned companies are M&A takeout candidates. We’ve seen it before, and odds are we will see it again. If you’ve been listening to CNBC or FOXBusiness, we are once again hearing that Boxed, a company that sits at the crosshairs of our Connected Society and Cash-Strapped Consumer investing themes, is once again in those crosshairs. Again, no surprise to us given we see Boxed as a cross between Amazon (AMZN) and Costco Wholesale (COST). With Walmart (WMT), Target (TGT), Kroger (KR) and others looking to catch Amazon, we see the logic.

For more on Boxed, here’s the conversation between Tematica’s resident mixologists, Lenore Hawkins and Chris Versace with Boxed CEO Chieh Huang. It’s a conversation filled with confirming data points as well as some movie references to keep it fun and one that will leave you understanding why any of those companies we mentioned above could benefit from the addition of Boxed.

 

 

Resources for this podcast:

Making a Nuanced Move With The Tematica Select Investment List

Making a Nuanced Move With The Tematica Select Investment List

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