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Kroger shuttering three ‘spokes’ in fast-delivery network

Kroger is closing three fast-delivery spokes.

The Kroger Co. is cutting back the reach of its automated fast-delivery program.

In an emailed statement to Chain Store Age, a spokesperson for America’s largest grocery retailer confirmed it is closing three cross-docking spoke facilities in its fast-delivery “hub and spoke” model. The Ocado-powered fulfillment centers are in San Antonio and Austin ,Texas, and Miami, Florida.

"Kroger’s commitment to innovation means that we test and learn quickly to identify the most effective ways to deliver fresh, affordable food to our customers," the spokesperson said. "Despite our best efforts, including the support from new customers, learnings from other locations and the incredible work of our associates, these facilities did not meet the benchmarks we set for success."

The spokesperson also said Kroger will provide transitional support and resources to impacted employees at those locations, and that this decision will not affect the company’s other automated fulfillment centers or cross-docking spoke locations.

"Kroger remains committed to growing its e-commerce offerings and delivering fresh food to more communities across the U.S.," the spokesperson concluded.

Kroger's fast-delivery model explained

Introduced in 2018 in partnership with U.K.-based online grocer Ocado Group, Kroger’s fast-delivery offering leverages a “hub and spoke” model relying on a leading-edge automated warehouse concept known as a customer fulfillment center (CFC).

The CFC model combines vertical integration, machine learning, and robotics with affordable and fast-delivery service for fresh food. CFC 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.

CFCs serve as hubs for the flexible, vertically integrated Kroger Delivery network, which also includes 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. Drivers may travel up to 90 miles with orders from facilities to make deliveries.

Kroger currently operates customer fulfillment centers in Monroe, OH, Groveland, FL, Forest Park, GA (Atlanta), Pleasant Prairie, WI, Dallas, TX, Romulus, MI (Detroit), Aurora, Colo., and Frederick, MD, with the expansion of additional customer fulfillment network facilities planned in the future.

Based in Cincinnati, Kroger operates 2,800 stores, including more than 100 stores in Southeast Texas and Louisiana, under a variety of banners across the U.S., including Kroger, Fred Meyer, Ralphs, Dillons, Smith's, King Soopers, Fry's, QFC, City Market, Owen's, Jay C, Pay Less, Baker's, Gerbes, Harris Teeter, Pick 'n Save, Metro Market and Mariano's.

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