Kroger introduces first Ocado-powered distribution centre in US

Kroger has announced the launch of what it claims is America’s first Customer Fulfilment Centre (CFC), using technology developed by UK-based delivery service Ocado.

The launch is the result of Kroger and Ocado’s exclusive partnership formed in 2018, which gave Kroger access to Ocado’s Smart Platform technology to enhance its fulfilment, picking and delivery capacity.

Later that year, the companies announced it will open 20 distribution centres in the US over the next three years, as part of its collaboration.

Kroger says its network of CFCs will accelerate its ecommerce capability, expand its customer reach and enable it to focus more on cost-effective supply chain and last-mile delivery solutions.

“2020 was a pivotal year for grocery ecommerce, with Kroger’s digital business scaling to over $10 billion – and achieving a record digital sales increase of 116%,” said Rodney McMullen, Kroger chairman and CEO.

“The momentum we’re experiencing is well-timed with the evolution of Kroger Delivery, underpinning the permanent shift in grocery consumer behaviour and need for enterprising and modern ecommerce and last-mile solutions – today’s true competitive horsepower.”

Located in Monroe, Ohio, the CFC measures 375,000 square-feet and is the first to open. Powered by Ocado, the centre combines vertical integration, machine learning and robotics with affordable and fast delivery service for fresh food.

The centres will feature over 1,000 robots alongside nearly 400 employees to retrieve, sort and pack items, which will then be loaded into delivery vans. The Monroe CFC can reportedly fulfil thousands of orders per day and has the capability to support fulfilment of pickup orders too.

Tim Steiner, co-founder and CEO of Ocado Group, said: “This moment marks the next phase of our partnership, and it comes against the backdrop of soaring demand for online grocery options in the US and worldwide.

“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 fulfilment of curbside pickup orders.”

A CFC in Groveland, Florida is scheduled to open to customers this spring. Kroger has also announced plans to open CFCs in Texas, Georgia, Maryland, Arizona, Wisconsin, Michigan and pacific northwest and west regions, with additional locations to follow.