Recently, Kroger launched a major expansion to its operations. The retailer is shaking the grocery sector as it unveiled its Customer Fulfillment Center (CFC), a first of its kind in the U.S. With this new launch, the retailer is combining vertical integration, machine learning, and robotics with affordable, friendly, and fast delivery service for fresh food.
“2020 was a pivotal year for grocery e-commerce, with Kroger’s digital business scaling to over $10 billion—and achieving a record digital sales increase of 116 percent,” said Rodney McMullen, Kroger’s Chairman and CEO. “We’re incredibly proud to achieve this milestone that advances our position as one of America’s leading e-commerce companies.”
Located in Monroe, Ohio, the new facility is powered by Ocado Group, a world leader in technology for grocery e-commerce and Kroger’s long-time partner in the grocery sector. The CFC, noted the press release, will transform and support the grocer’s thriving digital business.
“The momentum we’re experiencing is well-timed with the evolution of Kroger Delivery, underpinning the permanent shift in grocery consumer behavior and need for enterprising and modern e-commerce and last-mile solutions—today's true competitive horsepower,” McMullen continued. “It’s truly uplifting to reach this moment in Kroger’s history—better yet grocery industry's history—with our partners at Ocado. We’re appreciative of Tim Steiner and Luke Jensen’s collaboration to accomplish the next step in the expansion of our seamless ecosystem.”
In May 2018, Kroger and Ocado formed an exclusive partnership to introduce to the U.S. proprietary technology solutions focused on artificial intelligence, advanced robotics and automation, and creative solutions. All of these components culminate in creating more seamless and efficient fulfillment, picking, and delivery capabilities to provide for customers and expand Kroger’s reach and products to new geographies.
“The introduction of the first Customer Fulfillment Center marks a historic milestone for grocery retail in the U.S.,” said Tim Steiner, Co-Founder and CEO of Ocado Group. “Since signing our partnership in 2018, Ocado and Kroger teams have worked in tight-knit collaboration to lay the foundation to advance their state-of-the-art fulfillment ecosystem across the country, supporting Kroger to reach customers anywhere with anything, at any time.”
Kroger Delivery is a vertically integrated network, enabling coverage of up to 90 miles from the hub location and significantly more territory when spoke locations are integrated. In these highly automated Customer Fulfillment Centers, over 1,000 bots whizz around giant 3D grids, orchestrated by proprietary air-traffic control systems in the unlicensed spectrum. The grid, known as The Hive, contains totes with products and ready-to-deliver customer orders.
“This moment marks the next phase of our partnership, and it comes against the backdrop of soaring demand for online grocery options in the U.S. and worldwide,” Steiner explained. “In the coming years, we will open more automated CFCs across a range of sizes with Kroger. We will also roll out components of our software solutions to stores in collaboration with Kroger’s existing seamless platform to support fulfillment of curbside pickup orders. The breadth of this fulfillment ecosystem will be crucial in helping Kroger to continue to win in e-commerce across the U.S.”
According to the release, the Groveland, Florida, CFC is scheduled for opening this spring. Kroger has also announced plans to open CFCs in Dallas, Texas; Forest Park, Georgia; Frederick, Maryland; Phoenix, Arizona; Pleasant Prairie, Wisconsin; and Romulus, Michigan; and Pacific Northwest and West regions. As the network expands, Kroger will announce additional locations.
“We’re excited to be building a distribution network that creates a more equitable food system by providing greater accessibility to fresh food through the power of innovation,” said Gabriel Arreaga, Kroger’s Senior Vice President and Chief Supply Chain Officer. “Kroger Delivery’s network of Customer Fulfillment Centers will accelerate our e-commerce capabilities, focusing on more cost-effective supply chain and last-mile delivery solutions, seamless customer experiences, and new career opportunities.”
For more information on this new development, click here.
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