Kroger will bring next-gen fulfillment center to Michigan

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Kroger will bring next-gen fulfillment center to Michigan

By Dan Berthiaume - 09/28/2020

The Kroger Co. is following through on a promise to construct a leading-edge automated warehouse facility in the Great Lakes region.

America's largest grocery retailer, and Ocado (LSE: OCDO), one of the world’s largest dedicated online grocery retailers, is building a new “Customer Fulfillment Center” (CFC) in Romulus, Mich. In June, Kroger said it would build three new CFCs, including one in the Great Lakes region.

The CFC model – an automated warehouse facility with digital, artificial intelligence (AI), and robotic capabilities – will be used to serve customers across the region. Kroger is designing a flexible distribution network, combining disaggregated demand and the proximity of its stores and facilities that vary in design and size.

Kroger intends the new 135,000-sq.-ft. facility to expand its products to a larger footprint and create 250 new local jobs. It is expected to become operational 18 months after the site breaks ground and will support customers in several markets, including Michigan, Northern Ohio, and Indiana.

The new site will complement the retailer's previously announced CFC sites in Monroe, Ohio; Groveland, Fla.; Fredericksburg, Md.; Atlanta; Dallas; and Pleasant Prairie, Wis., as well as two sites planned for the Pacific Northwest and West regions. Kroger plans to open the country's first CFC in Monroe, Ohio, a suburb of Cincinnati, in early 2021.

Kroger and Ocado entered into an exclusive partnership in May 2018, in a deal that enables Kroger to leverage Ocado’s smart platform that supports online ordering, automated fulfillment and home delivery capabilities.

"Kroger is incredibly excited to develop one of our industry-leading Customer Fulfillment Centers in Michigan in relationship with Ocado to bring fresh food to our customers faster than ever before," said Robert Clark, Kroger senior VP of supply chain, manufacturing and sourcing. "We continue to invest in and constantly improve our e-commerce capabilities, focusing on cost-effective solutions. Our partnership with Ocado is an essential part of our evolving seamless ecosystem. In Michigan, we are engineering a smaller model for the region, leveraging advanced robotics technology and creative solutions to redefine the customer experience and respond to the growing demand for grocery e-commerce services."

"Grocery e-commerce has reached an inflection point in 2020, and with Kroger we are developing a game-changing ecosystem for serving online grocery across the U.S.,” said Luke Jensen, CEO of Ocado Solutions. “Powered by Ocado's state-of-the-art technology, this site illustrates the unique flexibility of Ocado's technology, as we are able to deploy sites of different sizes in different regions, to maximize penetration across diverse markets. Ocado's proven technology will allow Kroger to achieve the lowest cost-to-serve in the market.”