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Kroger goes live with self-driving delivery vehicles

Supermarket giant sells You Technology digital coupon unit

In a pair of technology announcements today, The Kroger Co. said it has started using unmanned vehicles for online grocery deliveries and formed a new relationship for managing digital offers.

At a Fry’s Food Store in Scottsdale, Ariz., Kroger launched what it calls the first-ever autonomous vehicle delivery service available to the general public. The service follows a successful pilot with Nuro, a Mountain View, Calif.-based robotics and artificial intelligence specialist, that began in August.

The test with Nuro in Scottsdale, which made almost a thousand grocery deliveries, used a fleet of self-driving Prius cars accompanied by vehicle operators, Kroger said. With the official launch of the service, the delivery fleet is being expanded to include the Nuro R1 custom unmanned vehicle.

With no driver or passengers, the R1 travels on public roads and only transports goods. The vehicle has been in development since 2016.

"Kroger customers are looking for new, convenient ways to feed their families and purchase the products they need quickly through services like pickup and delivery," Yael Cosset, chief digital officer at Kroger, said in a statement. "Our autonomous delivery pilot with Nuro over the past few months continues to prove the benefit of the flexible and reliable technology. Through this exciting and innovative partnership, we are delivering a great customer experience and advancing Kroger's commitment to redefine the grocery experience by creating an ecosystem that offers our customers anything, anytime and anywhere."

To use the autonomous vehicle grocery delivery service, customers shop for their groceries at or via the Fry’s mobile app and place their order according to available time slots. Orders can be scheduled for same-day or next-day delivery and are brought to customers’ homes by the Nuro R1 unmanned vehicle or the self-driving Prius cars. The service is available daily, and delivery costs $5.95, with no minimum order.

Kroger, which saw digital sales jump 60% in the third quarter, said its omnichannel coverage area now reaches more than 90% of customer households, including through its own Kroger Ship and Pickup online grocery services and its relationship with Instacart.

Nuro and Cincinnati-based Kroger announced its partnership in late June.

"Nuro envisions a world without errands, where everything is on-demand and can be delivered affordably,” commented Dave Ferguson, president and co-founder of Nuro. “Operating a delivery service using our custom unmanned vehicles is an important first step toward that goal.”

Kroger sells YouTech

Kroger also announced an agreement to sell You Technology, a digital coupon and digital rebate publishing subsidiary, to e-commerce analytics firm Inmar. The supermarket retailer, in turn, entered a long-term agreement with Winston-Salem, N.C.-based Inmar for digital offer management services.

According to Cosset (left), You Technology would be in a better position to grow and reach more retailers under Inmar, while continuing to support the Restock Kroger plan to redefine the customer experience. Kroger had acquired South San Francisco-based YouTech in February 2014.

"As part of our strategic relationship, the combination of Kroger's unique assets and personalization expertise and Inmar's technology solutions now with YouTech will drive more innovation and value for Kroger customers and CPG partners," Cosset explained. "This services agreement supports Restock Kroger, namely the partner for customer value and redefine the grocery customer experience drivers. By joining together with Inmar, YouTech will have the opportunity to expand both its retailer relationships outside of Kroger and its portfolio of capabilities. We'd like to thank the talented team of YouTech associates for building a successful business and look forward to working with both Inmar and YouTech closely to ensure a smooth transition."

YouTech, founded in 2007, provides a cloud-based platform for the redemption of digital offers at Kroger and other U.S. retailers. Kroger said that combining YouTech's online engagement capabilities with Inmar's expertise in managing open platforms will improve accessibility and expand coupon and rebate distribution for consumer packaged goods (CPG) companies and help retailers better compete.

"We are thrilled for YouTech to join Inmar, enhancing our already exceptional ability to help retailers drive loyalty and growth through better digital content," said David Mounts, chairman and CEO of Inmar. "Following the acquisition, Inmar looks forward to working closely with Kroger and [its analytics subsidiary] 84.51⁰ to bring high-quality digital offers to Kroger customers. The acquisition of YouTech will also broaden our distribution network and enhance Inmar's capabilities as a trusted, independent intermediary, allowing us to better serve the evolving needs of both CPGs and all of our retail partners."

Financial terms of the deal weren’t disclosed. The transaction is expected to close in Kroger’s fiscal 2019 first quarter, pending regulatory approval and customary closing conditions.

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