Kroger expand fulfillment network to three cities

A Krogewr delivery person drops off bags on the doorstep of a house.

Written by James Shea

Kroger continues to push its microfulfillment and delivery model and says it plans to expand to three new cities — Austin and San Antonio, Texas and Birmingham, Ala.

“Kroger today looks very different than it did in 1883 when we opened our first store. But the core principles that made that store successful – service, selection, value, and our commitment to our customers – remain the bedrock of our business,” Kroger Chairman and CEO Rodney McMullen said.

The facilities are a continuation of a partnership with Ocado, a technology company that specializes in e-commerce in the grocery industry. Since 2018, the companies have collaborated to establish a delivery network that combines artificial intelligence, advanced robotics and automation. Through the hub-and-spoke delivery network, the organization now serves customers in Florida, as an example, without traditional brick-and-mortar stores.

The delivery network relies on highly automated fulfillment. The three facilities are expected to begin deliveries in late 2022. The company already operates fulfillment centers in Atlanta, Cincinnati and Dallas. Other sites around the country are also expected to open in 2022.

“I’m incredibly excited for the future of Kroger, and both thriving physical stores and digital solutions are part of it,” McMullen said. “We continue to feel great about the momentum we’re experiencing with Kroger Delivery and our partnership with Ocado, supporting Kroger in strategically leveraging our unique assets to expand in existing regions,.”

Kroger’s digital and delivery strategy appears to be working. The company beat quarterly earnings expectations in March. It says it has reduced the cost of online fulfillment and delivery with automation and robotics. Digital sales have more than doubled since 2019.

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