Kroger Thinking Even Smaller With Newest Ocado Facility

9/28/2020

Kroger, Ocado Pin Michigan for Latest Automated Warehouse

Kroger and Ocado have announced the cities for seven fulfillment centers and broad regions for two more. When rolling ou their partnership in 2018, the two companies said they would "reveal up to a total of 20 over the first three years of the agreement."

The Kroger Co. has revealed the location of its newest and smallest automated fulfillment center near Detroit, which the grocer teased in June. The 135,000-square-foot facility powered by U.K. retailer Ocado is a fraction of the size of previously announced locations that measure around 350,000 square feet and will be located adjacent to an existing Kroger distribution center.

"We continue to invest in and constantly improve our e-commerce capabilities, focusing on cost-effective solutions. Our partnership with Ocado is an essential part of our evolving seamless ecosystem." said Robert Clark, Kroger's SVP of supply chain, manufacturing and sourcing. "In Michigan, we are engineering a smaller model for the region, leveraging advanced robotics technology and creative solutions to redefine the customer experience and respond to the growing demand for grocery e-commerce services."

This CFC – an automated warehouse facility with digital and robotic capabilities – will be used to serve customers in Michigan, northern Ohio and Indiana. This is all part of Kroger's plan to design a flexible distribution network, combining disaggregated demand and the proximity of its stores and facilities that vary in design and size.

The Michigan facility is projected to be operational 18 months after the site breaks ground; although Kroger and Ocado have revealed a number of locations, the partnership has yet to go live. However, Ocado's other North American partnership, with Sobeys in Canada, began taking e-commerce orders earlier this year in the greater Toronto area.

"Grocery e-commerce has reached an inflection point in 2020, and with Kroger we are developing a game-changing ecosystem for serving online grocery across the United States. Powered by Ocado's state-of-the-art technology, this site illustrates the unique flexibility of Ocado's technology, as we are able to deploy sites of different sizes in different regions, to maximize penetration across diverse markets," said Luke Jensen, CEO of U.K.-based Ocado Solutions. "Ocado's proven technology will allow Kroger to achieve the lowest cost-to-serve in the market, combined with the best freshness, accuracy and service."

Kroger's Romulus facility will complement the grocer’s previously revealed CFC sites in Monroe, Ohio; Groveland, Florida; Fredericksburg, Maryland; Atlanta; Dallas; and Pleasant Prairie, Wisconsin. The company has also broadly referenced future sites in the Pacific Northwest and West regions. The Ohio facility – the country’s first CFC, according to the grocer – is scheduled to make its official debut in early 2021.

Cincinnati-based Kroger employs nearly half a million associates who serve 9 million-plus customers daily through a seamless digital shopping experience and 2,757 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 consumable sretailers in North America.