Kroger plans Northeast entry with next-gen fulfillment centers

America’s largest grocer is entering a new market and expanding its customer fulfillment centers (CFCs) and rapid online delivery program.

The Kroger Co. is continuing the momentum of its leading-edge Kroger Delivery service and automated warehouse concept known as a customer fulfillment center (CFC), with a planned debut entry into the Northeast market and expansion of CFCs in California and Florida.

Introduced in partnership with U.K.-based online grocer Ocado in May 2018, the CFC model combines vertical integration, machine learning, and robotics with affordable and fast delivery service for fresh food. The facilities leverage proprietary technology solutions focused on artificial intelligence (AI) and advanced robotics and automation to create more seamless and efficient fulfillment, picking and delivery capabilities for enhanced digital commerce capabilities across the U.S.

CFC also represents one of the models engineered for the grocer’s flexible, vertically integrated Kroger Delivery network, which will also include smaller automated facilities and spoke locations. In CFCs, more than 1,000 robots traverse 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.

As customers' orders near their delivery times, the robots retrieve products from The Hive, which are presented at stations for items to be sorted for delivery via an algorithmic sorting process. For example, fragile items are placed on top, bags are evenly weighted, and each order is optimized to fit into the fewest number of bags, reducing plastic use.

Once completed, orders are loaded into a temperature-controlled Kroger delivery van, which can store up to 20 orders. Machine learning algorithms dynamically optimize delivery routes, considering factors like road conditions and optimal fuel efficiency. 

As part of its strategy to expand Kroger Delivery and the CFC model supporting it, the company will enter the Northeast for the first time, offering Kroger Delivery enabled by a customer fulfillment center (CFC). Kroger will also expand its existing operations and boost capacity in California with the addition of two medium- and smaller-sized CFCs.

Kroger Delivery launched in central Florida in June 2021, and now Kroger will enter South Florida and introduce two smaller-sized fulfillment facilities. These will join the already live CFC in Groveland, Fla. as well as "spoke" sites in Jacksonville and Tampa. It will also mark the introduction of two automated local fulfillment centers with Ocado, enabling Kroger Delivery to serve customers as fast as 30 minutes with a selection of 10,000 fresh food items and essentials, and to deliver same-day and next-day orders with 35,000 items.

"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, Kroger senior VP and chief supply chain officer. "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 Delivery currently operates CFCs in Groveland, Fla. and Monroe, Ohio. In addition to the newly announced five facilities, Kroger Delivery is slated to open previously announced sites in Dallas; Forest Park, Ga. (Atlanta); Frederick, Md.; Phoenix; Pleasant Prairie, Wis.; Romulus, Mich. (Detroit); and sites in the South, West, and Pacific Northwest. As the Kroger Delivery network expands, Kroger will announce new facilities and plans.

"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 Rodney McMullen, Kroger chairman and CEO. "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," continued McMullen.

Kroger employs nearly half a million associates and operates almost 2,800 stores under a variety of banners that include Kroger, Ralphs, Dillons, Smith’s, King Soopers, Foor 4 Less, Fry’s, Harris Teeter, Fred Meyer and others.