Taking on H-E-B on its home turf, Kroger launches grocery delivery in San Antonio – San Antonio Express-News

Kroger has returned to San Antonio, a market long dominated by hometown grocer H-E-B and its rival Walmart.

Instead, the Cincinnati-based grocer has opened what it calls a “spoke facility” on the East Side and rolled out delivery service for groceries and other products from there.

The spoke, a 70,000-square-foot last-mile warehouse at 4325 Milling Road, can deliver items within a 90-minute radius, said Kroger spokesperson April Martin. It and a sister facility in Austin work with a just-opened 350,000-square-foot automated fulfillment center in Dallas — Kroger calls it a “hub” — where people and robots prepare orders and get them moving.

It’s not Kroger’s first foray in San Antonio: It operated 15 stores here until closing them in 1993 amid a labor dispute. It’s re-entering the market with a delivery-only model it says has worked in other markets.

Kroger said the San Antonio spoke facility will employ as many 161 people.

Workers prepare orders at a Kroger customer fulfillment hub.

Workers prepare orders at a Kroger customer fulfillment hub.

To order delivery from Kroger in San Antonio, customers visit its website or app, create an account, enter their location, select items, choose a time slot and wait for a driver to arrive.

Small orders don’t come for free. On one webpage, Kroger said its fee for delivery is $6.95; in a FAQ section, it said fees can reach $11.95 depending on location. But San Antonio customers have access to Kroger’s paid membership program, which includes unlimited free delivery on orders over $35, Martin said.

How does that compare with H-E-B’s delivery fees? It varies, depending on how fast the order is wanted.

On an order for groceries to be dropped off “express” the same day, H-E-B’s fees ranged from $5 to $11.95 depending on the desire delivery time. There was a $5 fee for delivery the following days. H-E-B also added a driver tip and a temporary fuel surcharge, which it said “helps offset higher fuel costs” for drivers and “may vary based on fuel prices.”

From Walmart, fees for delivery in two hours or less totaled $17.95. The cost was $7.95 or $9.95 for delivery later the same day or the following days depending on the time slot, and an order below $35 came with a $6.99 fee.

Walmart+ members receive free delivery for orders under $35, according to the company’s website.

Kroger,which announced plans in March to come back to San Antonio, will be competing for customers’ dollars in a market dominated by H-E-B.

The San Antonio-based grocer captured 52.4 percent of the local market share in 2021, with 57 stores and about $4.2 billion in sales, according to a report by industry publication Chain Store Guide.

Trucks wait outside Kroger’s fulfillment center in Dallas last week.

Trucks wait outside Kroger’s fulfillment center in Dallas last week.

Rebecca Slezak, MBR / Associated Press

Walmart and its Sam’s Club chain claimed 28 percent of the market, with 34 stores and about $2.3 billion in sales.

The retailers with the next-biggest slices of the San Antonio market were Target, with 5 percent across 13 stores, and Costco, with 4.8 percent across three stores.

Kroger is building out its delivery network in partnership with technology company Ocado Group using artificial intelligence, advanced robotics and automation.

That network includes fulfillment centers like the one in Dallas, where more than 1,000 robots move on 3D grids bringing products to stations to be sorted for delivery, Kroger said. Orders are then loaded into refrigerated vans and algorithms determine the most efficient delivery routes.

Kroger is also working with other companies such as Nuro and Shipt to deliver products to customers.

It’s been growing its delivery push rapidly. Tuesday, it announced that beyond Dallas, customer fulfillment centers are operating in Monroe, Ohio; Groveland, Fla.; Forest Park, Ga.; Pleasant Prairie, Wis.; and Romulus, Mich. More are planned.

Kroger has about 2,800 stores across the U.S. operating in 35 states under the Kroger and other brands. It has more than 200 in Texas, mostly in the Dallas and Houston metro areas.

madison.iszler@express-news.net

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