The grocery delivery sector continues to heat up as retailers reevaluate their operations to increase both convenience and safety for their consumers. One of the companies working to bolster its delivery strategy is Kroger, which recently announced plans to cut the ribbon on multiple new fulfillment centers powered by the Ocado Group. Kroger will optimize the vertical integration, machine learning, and robotics of these centers to provide fast and affordable delivery service to more consumers nationwide.
"Kroger Delivery is a thriving part of our dynamic ecosystem and is transforming grocery e-commerce and meeting a range of customer needs through the introduction of first-of-its-kind technology in the U.S. developed by Ocado," said Kroger's Chairman and Chief Executive Officer Rodney McMullen. "Kroger's growing seamless ecosystem continues to scale, and we're committed to doubling both our digital sales and profitability rate by the end of 2023 and Kroger Delivery will help us reach this target. We feel great about the momentum we're experiencing with Kroger Delivery and our partnership with Ocado and are strategically leveraging our assets to expand our operations in existing regions as well as enter new geographies on the East Coast that leverage facilities across a growing range of sizes."
The retailer's recent announcement includes plans for expansion in the Northeast, California, and Florida, according to a press release. Details surrounding customer coverage areas, jobs, facility sizes, and timing are expected to be revealed in the coming months.
While exact details of the facilities were not announced, Kroger noted that this will be the company's entrance into the Northeast, offering Kroger Delivery enabled by a customer fulfillment center, which will meet the need for same-day and next-day grocery delivery demand. Kroger will also be expanding its existing operations in California and boost capacity in the state with the addition of two new customer fulfillment centers.
"I am delighted that we're bringing Ocado's world-leading technology to Kroger customers across the U.S.," said Luke Jensen, Chief Executive Officer of Ocado Solutions. "The Northeast is another new geography for Kroger, and we're excited to enter it with them. Moreover, with the addition of fulfillment centers in Southern California, our partnership is truly revolutionizing the U.S. grocery online landscape from coast to coast."
Kroger first launched its delivery service in Central Florida earlier this year, and the new operation gained momentum faster than anticipated, creating high customer repeat rates and net promoter scores. To continue this impressive growth, Kroger will enter South Florida and introduce two smaller-sized fulfillment centers that will join the already launched center in Groveland, Florida, as well as “spoke" sites in Jacksonville and Tampa.
"The acceleration of Kroger Delivery continues with these new facilities and our continued focus on creating career opportunities and serving customers through interconnected, automated, and innovative fulfillment models that cater to different and accretive grocery shopper missions in both new and existing geographies," said Gabriel Arreaga, Senior Vice President and Chief Supply Chain Officer, Kroger. "We have a pipeline of sites in development across the U.S., with several scheduled to open next year, and we're excited to continue delivering the Kroger experience to more doorsteps."
Kroger's expansion in the Florida market will also mark the introduction of two automated local fulfillment centers with Ocado, allowing Kroger Delivery to serve its shopper in as fast as 30 minutes with a selection of over 10,000 fresh food items and essentials, in addition to offering same-day and next-day orders for 35,000 items.
"Kroger is also leveraging the full breadth of Ocado's fulfillment capabilities to meet the growing range of customer wants and demands," Jensen continued. “Alongside the current rollout of our automated facilities and software to optimize fulfillment in stores for curbside pickup, today's announcement of a further CFC in Florida and the introduction of our first 'Zoom' micro fulfillment site in the U.S., serving the immediacy market, is a testament to the breadth and flexibility of the offering we are helping to bring to Kroger shoppers. These fulfillment centers will also benefit from significant upstream efficiencies, with the existing CFC in Groveland able to act as a major supply hub into the new Florida sites."
Kroger currently operates customer fulfillment centers in Groveland, Florida, and Monroe, Ohio, and the retailer recently announced five other new facilities in Dallas, Texas; Forest Park, Georgia; Frederick, Maryland; Phoenix, Arizona; Pleasant Prairie, Wisconsin; Romulus, Michigan; and in the South, West, and Pacific Northwest.
Keep an eye on Deli Market News as we continue to report on the ambitious growth strategies taking place in the retail sector.