Kroger Expands Grocery Fulfillment Network

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Kroger Expands Grocery Fulfillment Network

By Thad Rueter - 01/25/2021
Kroger Expands Grocery Fulfillment Network
The CFC model — an automated warehouse facility with digital and robotic capabilities — will be used to serve customers across Phoenix.

With grocery e-commerce on the upswing, The Kroger Co. said it is building a new customer fulfillment center (CFC) in Phoenix, Arizona. The food retailer is partnering with Ocado on the project, which was previously announced, though without location details.

The CFC model an automated warehouse facility with digital and robotic capabilities will be used to serve customers across the region. Kroger says it is designing a flexible distribution network, combining disaggregated demand and the proximity of its stores and facilities that vary in design and size.

This new 200,000-square-foot CFC will accelerate Kroger's ability to expand its products to a larger footprint. The CFC is expected to become operational 24 months after the site breaks ground and will support customers across Arizona.

"Kroger continues to accelerate the expansion of our national network to redefine the customer experience," said Gabriel Arreaga, Kroger's chief supply chain officer. "Our partnership with Ocado is and will continue to be rooted in our ability to deliver a value-added customer-centric solution that brings fresh food to customers through our seamless ecosystem."

One of the biggest stories of 2020 was how the pandemic produced a growth spurt in food retail e-commerce — Boston-based L.E.K. Consulting estimates that some 35% of U.S. households now buy groceries via online or mobile channels. One of the biggest stories of 2021 will be how food retailers will refashion supply-chain and fulfillment services to handle all of that e-commerce demand — and this new Kroger-Ocado project helps to illustrate those ongoing changes.

This newly named location will complement Kroger's previously announced CFC sites in Monroe, Ohio; Groveland, Florida; Frederick, Maryland; Atlanta, Georgia; Dallas, Texas; Pleasant Prairie, Wisconsin; Romulus, Michigan; and the Pacific Northwest and West regions. Kroger plans to open the country's first two CFC sites in Monroe, Ohio, a suburb of Cincinnati, and Groveland, Florida, in early 2021. 

"With Kroger we are developing a game-changing ecosystem for serving online grocery to customers across the United States. This includes Ocado's automated CFCs across a range of sizes, as well as software to optimize fulfilment in stores for curbside pickup," said Luke Jensen, CEO of Ocado Solutions. "Powered by Ocado's state-of-the-art, proprietary technologies, this site will be crucial in bringing unrivalled online grocery experiences to homes across Arizona and wider geographies."    

As part of its accelerated growth plan, Kroger is also investing and innovating to optimize in-store fulfilment technology and processes. Through their expanding partnership, Kroger is also collaborating with Ocado to leverage their in-store fulfilment capabilities with the best of Kroger's technology and digital solutions to support the rapid growth of pickup demand across Kroger stores nationwide. Ocado's in-store fulfilment solution includes proprietary software that supports associates' efforts to assemble orders and makes it easier and more efficient for them to find products when fulfilling customer pickup orders.

Cincinnati-based Kroger employs nearly half a million associates who serve 9 million-plus customers daily through a seamless digital shopping experience and 2,800 retail food stores under a variety of banner names. The company is No. 3 on The PG 100, Progressive Grocer’s 2020 list of the top food and consumables retailers in North America.