Kroger and Ocado to roll out enhanced in-store fulfilment capabilities and start operating two customer fulfillment centers in early 2021

By Mary Ellen Shoup

- Last updated on GMT

Photo: Kroger
Photo: Kroger

Related tags Kroger Online grocery Ocado

US grocery retailer Kroger and UK-based grocery e-commerce tech company Ocado will construct an additional automated Customer Fulfillment Center (CFC) in the South region, while also collaborating to roll out in-store fulfillment (ISF) capabilities across Kroger stores in 2021 to support the rise of online grocery services.

"Kroger continues to accelerate the expansion of our national network to redefine the customer experience,"​ commented Gabriel Arreaga, Kroger's chief supply chain officer.

"Our partnership with Ocado is and will continue to be rooted in our ability to deliver a value-added customer-centric solution that brings fresh food to customers through our seamless ecosystem."

Kroger and Ocado entered a partnership to build a CFC model across the US in 2018 – incorporating state-of-the-art automation and AI – adding to its previously announced sites in Monroe, Ohio; Groveland, Fla.; Frederick, Md.; Atlanta, Ga.; Dallas, Texas; Pleasant Prairie, Wisc.; Romulus, Mich.; and the Pacific Northwest and West regions. The sites are not operational yet, but Kroger said it plans to open its first two CFC sites in Monroe, Ohio, and Groveland, Fla., in early 2021.

The new CFC facility located in the "South region"​ will be 200,000 square-feet with exact location and construction dates of the facility to be announced soon, said Kroger.

Using Ocado’s technology "will allow Kroger​ to achieve the lowest cost-to-serve in the market, combined with the best freshness, accuracy and service,"​ said Luke Jensen, CEO of Ocado Solutions.

"In the long term, we know that winning online in grocery means having the best customer service, underpinned by the best operational economics,"​ said Jensen.

In-store fulfillment push

Kroger’s digital sales in Q2 2020 grew 127% as consumers used the retailer’s grocery delivery and pickup services, which are capable of serving 98% of customers of Kroger's 11 million daily customers.

“While COVID-19 has not necessarily changed how we think about our approach to e-commerce, it has accelerated our thinking about how our full evolution of seamless strategy, inclusive of Ocado. … Our network will flex as demand matures and the optionality will allow us to fulfill same-day or next-day delivery or pickup and customers or store replenishment,”​ Kroger CEO Rodney McMullen said during its Q2 2020 earnings call in September.

Leveraging Ocado's in-store fulfilment solution technology, which includes proprietary software, will assist store employees in assembling orders by making it easier and more efficient for them to find products in-store. This will help Kroger meet the strong online grocery demand the retailer has experienced throughout the pandemic, a trend which the retailer expects will be persist well into 2021​,

"Kroger continues to accelerate the development and rollout of customer-centric technology and digital capabilities to build a seamless ecosystem that combines the best of the physical store experience with the digital experience,"​ said Yael Cosset, Kroger's chief technology and digital officer.

"Ocado's in-store fulfillment capabilities, leveraging AI, will further contribute to continuous improvement of the customer pickup experience."

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