Technological Investment in Grocery Chains: Innovating on Exploitation

In a previous article [1], we discussed the ongoing merger between Kroger and Albertsons, briefly touching on how grocery companies leverage new technologies to boost profits amidst growing competition. Although it wasn’t the focus of that article, the issue of technological innovation highlights a critical concern: the increasing exploitation of the working class. To understand how Kroger is expanding its profits, we must examine its partnership with Ocado Group, the company licensing out these innovations.

Ocado: A Laboratory For Exploitation

Ocado, a UK-based company, operates in three divisions: retail, logistics, and technology. These divisions collaborate to test and apply existing and emerging technologies, such as drones and artificial intelligence, to generate investor interest, increase retail profits, and enhance logistics efficiency. Ocado also leases these technologies to the highest bidders, positioning itself as a leading player in the global grocery industry. The company has secured exclusive contracts with Kroger in the US, Aeon in Japan, Casino in France [2], and Auchan Retail, which operates companies like Alcampo in Spain [3].

However, it’s important to note that these partnerships don’t always involve the full range of technology Ocado is testing. For instance, Ocado’s Zoom service, which promises grocery delivery within an hour, relies on pedal bikes and other light vehicles [4]. They have also tested self-driving delivery vans, where a human is present only to intervene in case of an emergency [5]. As seen with Kroger in the US, Ocado did not design these technologies to improve workers’ lives but to deepen their exploitation. In 2021, Ocado workers experienced a £5 pay cut when the company switched its Zoom service workers to a new third-party contractor [6]. Fortunately, this led to an organized response from workers, forcing Ocado to offer them direct employment. However, this situation still reflects the company’s efforts to place the burden of profitability on its workforce.

Despite Ocado’s soaring value, the company is running a deficit of £403 million [7]. This figure has rapidly grown over the past several years, representing over £100 million more than the previous year [8]. Nonetheless, Ocado has promised investors it will achieve pre-tax profitability within six years despite slowing demand for its services. To address its financial difficulties, Ocado is aggressively expanding its technology division, which, although the smallest in revenue, is the fastest-growing, with a 21.8% increase [9]. The technologies and strategies developed in the UK, which often worsen conditions for workers, could easily be exported to other countries, benefiting capitalists at the expense of labor.

Kroger: Automation and “Green Energy”

Kroger has set a target to reduce greenhouse gas emissions by 30% between 2018 and 2030 by installing solar panels and glass doors in its stores [10] and purchasing electric delivery vehicles. The company is leveraging state tax breaks to expand its fleet of Ford-manufactured trucks (Ford is one of Ceres’s many affiliates [11]). These actions are less about environmental care and more about capitalizing on wealth controlled by the bourgeois government, extracted from workers, to expand capitalist profits.

Additionally, Kroger has begun limited use of automated delivery vehicles, partnering with Gatik for “middle-mile” deliveries [12]. Recent information suggests that by 2024-2025, these trucks could be “freight-only,” meaning no human driver will accompany the vehicle.

Fully autonomous delivery trucks pose a significant risk to workers’ livelihoods. This trend follows Ocado’s testing of delivery vehicles and threatens unionized workers in Kroger logistics, who enjoy better pay and benefits than non-unionized customer service delivery drivers (although this is subject to change with the Detroit warehouse affiliating with the IBT in May of this year [13]). The International Brotherhood of Teamsters (IBT), the union representing long-haul and warehouse drivers, has responded to the testing of automated vehicles by seeking legislation to regulate their rollout [14] in line with its Teamster Autonomous Federal Policy Principles [15]. However, the IBT’s approach primarily appeals to Democratic Party legislators, viewed as “allies,” which could lead to compromises, as seen in previous contract struggles, such as with UPS.

Kroger’s Store Strategy

While Kroger Boost and its partnership with Ocado have been central to Kroger’s technological investments, delivery and logistics are not Kroger’s bread and butter. The question of its stores remains, and the investments they are receiving highlight this focus. In addition to leveraging tax incentives by investing in more efficient energy consumption, Kroger is exploring new avenues for profit, such as digital shelf labels. According to Kroger, Ocado designed these labels to digitally display the price of an item and update it as needed, minimizing mislabeled prices and reducing labor costs. The initial rollout in 2018 began with approximately 200 stores, with plans to expand. This move has faced criticism, leading to an investigation by US Senators Warren and Casey over accusations of surge pricing [16]. A Kroger spokesperson responded that the rollout was a cost-saving measure to sell items for cheaper [17].

In partnership with Microsoft, Kroger is also rolling out smart shelving with cameras to collect customer data, further enhancing pricing strategies to maximize profits for each commodity sold.

However, while some media outlets encourage workers to combat this by “voting with their wallets,” and reformist Democrats focus on fairer exploitation to protect capital in the long run, these investments will proceed regardless. If profits increase, investments will expand; if not, they will move elsewhere. We can see this in a recent development with the Kroger-Albertsons merger. On August 19th, Kroger filed a suit against the FTC to block the review of the merger, demanding to halt the proceedings on the grounds of being “unconstitutional” [18]. A week later, Kroger threatened to pull out of the deal entirely in the face of a potential injunction [19]. While Kroger is putting its best foot forward to win this merger, it has limitations and is willing to shift focus if necessary.

Despite the investments Kroger is making in its stores and the strategic acquisitions it is pursuing, there is no indication that Kroger is abandoning brick-and-mortar grocery stores, as some might speculate, considering its foray into delivery. Instead, it is more accurate to say that Kroger is reworking its stores to maximize profit while using delivery to reach customers who either can’t shop in-store or are willing to pay more for the convenience. Kroger sees the elimination of Albertsons as beneficial to this process. However, as New Worker speculated and Kroger admitted in a recent hearing, its main competitors are Walmart, Costco, and Amazon. Kroger is more than willing to reassess its strategy if it cannot meet its demands for the merger’s approval.

How Should We Proceed?

The rapid development of automated technologies presents unprecedented risks, with companies worldwide racing to lead in these innovations. They now use climate change as a pretext to expand operations and profits rather than to protect the environment. They put workers at constant risk with acquisitions and work to drive down their livelihoods by developing new technologies to replace their labor or hike prices. The bourgeoisie offers workers only two options: accept their fate or trust in reformist trade union leaders and technocratic lawmakers who can only soften capitalism’s harsh edges.

Technological investment often appears to conflict with the interests of labor. However, in a society free from exploitation, new technologies would free up more time, produce necessities more efficiently, and cause less environmental damage. Whereas technology under capitalism ceases to advance when it fails to expand profits, socialism-communism develops technology to meet the needs of the working class and improve their livelihoods, operating under new political-economic conditions than capitalism. Under socialism, humanity’s technological innovation will be the gift of a better world, much like Prometheus gifted humanity fire.

Therefore, the working class must adopt an independent strategy. Organizing customer service delivery drivers alongside other drivers and warehouse workers is essential. We must develop a militant approach to organizing within workplaces, preparing workers to leverage their labor power to protect their livelihoods. As the CWPUSA has consistently emphasized, a revolutionary working-class party is necessary. This party would empower militants, introduce class-oriented views and tactics within trade unions, and guide fellow workers away from the influence of reformist trade union leadership and bourgeois politicians, preparing them to take the actions needed to end capitalism-imperialism and enjoy the social benefits of automation, rather than living in fear of losing their livelihoods.

Sources:

[1] The Kroger-Albertsons Merger: Good for Business, Bad for Workers | New Worker. (2024, March 23). New Worker. https://newworker.us/domestic/the-kroger-albertsons-merger-good-for-business-bad-for-workers/ ‌(2023, July 18).

[2] Ocado jumps on return to first-half underlying profit (J. Davey, Ed.) [Review of Ocado jumps on return to first-half underlying profit]. Reuters. https://www.reuters.com/business/retail-consumer/ocado-keeps-guidance-after-return-first-half-underlying-profit-2023-07-18/

‌[3] Our Global OSP Partners. (n.d.). Ocado Group. https://ocadogroup.com/our-business/osp-partners

‌[4] Reuters. (2021, February 2). Britain’s Ocado turns to electric and pedal power for Zoom service. Reuters.
https://www.reuters.com/business/retail-consumer/britains-ocado-turns-electric-pedal-power-zoom-service-2021-02-02/

[5] Asda and Ocado trial “self-driving” delivery vans in London - Retail Gazette. (2022, December 21). Retail Gazette. https://www.retailgazette.co.uk/blog/2022/12/asda-ocado-delivery/

‌[6] Gohil, N. (2021, October 9). Ocado delivery driver “treated like a slave” as pay is cut by “£5 an hour.” MyLondon. https://www.mylondon.news/news/west-london-news/ocado-delivery-driver-treated-like-21792283

[7] (2024, February 29). Ocado pledges profit at pretax level in six years (J. Davey, Ed.) [Review of Ocado pledges profit at pretax level in six years]. Reuters.
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‌[9] Half Year Results 2024. (n.d.). Ocado Group.
https://ocadogroup.com/investors/half-year-results-2024

‌[10] Smart Energy Decisions. (2024). Kroger targets 30% emissions reduction. Smartenergydecisions.com.
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‌[11] The DSA and the Green New Deal | New Worker. (2024, June 3). New Worker.
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[12] Wire, B. (2023, December 14). Gatik and Kroger Celebrate Successful Autonomous Trucking Operations with City of Dallas and Texas State Partners. Yahoo Finance; Yahoo Finance.
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[13] Moskowitz, D., & Moskowitz, D. (2024, May 20). In Landslide Victory, Kroger Workers Join Teamsters Local 337. International Brotherhood of Teamsters.
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[14] McQuaid, M., & McQuaid, M. (2022, September 27). Teamsters Fight for Safety and Worker Protections in Autonomous Vehicle Bills. International Brotherhood of Teamsters.
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‌[15] McQuaid, M., & McQuaid, M. (2023, September 12). Teamsters Autonomous Vehicle Federal Policy Principles. International Brotherhood of Teamsters.
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[16] Battle, P. (2024, August 16). Kroger has alarming plans for digital price tags, lawmakers say [Review of Kroger has alarming plans for digital price tags, lawmakers say]. The Street.
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[17] Morrow, A. (2024, August 22). Surge pricing your groceries: What could go wrong? CNN; CNN.
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[18] Godoy, J. (2024, August 19). Kroger sues Federal Trade Commission in effort to stop review of Albertsons merger. The Columbus Dispatch; The Columbus Dispatch.
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[19] Monk, D. (2024, August 27). Kroger vows to terminate Albertsons merger if federal judge delays its closing. WCPO 9 Cincinnati; WCPO 9 Cincinnati. https://www.wcpo.com/news/local-news/i-team/kroger-vows-to-terminate-albertsons-merger-if-federal-judge-delays-its-closing