Dive Brief:

• Kroger will bring miniature hydroponic produce farms to its stores this month, according to a company release. The produce farms, built and maintained by Infarm, will launch at two of Kroger’s QFC locations in Bellevue and Kirkland, Washington, with plans for 13 more locations by March 2020, according to Bloomberg.
• Infarm will use hydroponic technology to grow produce on-site at the QFC stores, removing the need for transportation and storage of parsley, cilantro and other greens.​ Retailers pay Infarm a service fee for the produce itself as well as planting and preparing it for sale, Bloomberg reported. 
• Kroger says its in-store farms with Infarm will produce a more eco-friendly product and the freshest seasonal produce. Suzy Monford, Kroger's vice president of fresh, told Bloomberg that the greens will only need attention from associates once or twice a week and will not sell for more than Kroger’s existing private label organic produce.

Dive Insight:

Kroger’s partnership with Infarm is a part of the overall industry’s push to improve its produce offerings in line with customer demands for fresher products and lighter environmental impacts. Produce is an important area of the store where most customers still prefer to shop in-person versus online. 

By cutting out the supply chain from farm to the grocery store, Kroger has more control over the quality of the produce, according to Infarm. The grocer also cuts down on the usage of water, pesticides, fertilizers as well as emissions from transport, and reduces costs associated with storage. Monford told Bloomberg this trickles down into cost savings for shoppers. 

A fresh approach to produce shopping could lure new customers, too. With $60 billion in annual sales, produce is one of the most powerful categories for supermarkets. But growth has slowed lately, with only a 1.7% increase in sales in 2018, according to the Food Marketing Institute's latest Power of Produce report.

That doesn’t mean shoppers are buying less produce — just that they're shifting their spending, according to FMI. In the U.S. sales of fresh herbs and spices are up 6% and greens are up 8%, according to Nielsen. 

Many shoppers have also shifted their produce shopping away from traditional retailers in favor of farmer's markets and natural grocers that offer fresh, locally sourced ingredients. 

Although this is Infarm’s first venture in the U.S., the company has worked with many well-known retailers in Europe including Amazon Fresh in Germany, Marks & Spencer in the U.K. and Metro in France. 

This isn't the first time Kroger has tried to shake up produce sales. The retailer launched its own line of misshapen produce last year, called Peculiar Picks, and in September it expanded its line of produce that uses Apeel Science’s plant-based technology to keep produce fresher for longer, resulting in waste reduction.