Next-gen Kroger fulfillment center will rise in Phoenix

The Kroger Co. is following through on a pledge to build a leading-edge automated warehouse facility in the Southwest region.

America's largest grocery retailer and Ocado (LSE: OCDO), one of the world’s largest dedicated online grocery retailers, are building a new “Customer Fulfillment Center” (CFC) in Phoenix. This new 200,000-sq.-ft. facility will accelerate Kroger's ability to expand its products to a larger footprint and is expected to become operational 24 months after the site breaks ground.

Kroger is designing a flexible distribution network, combining disaggregated demand and the proximity of its stores and facilities that vary in design and size. The retailer has partnered with Ocado to accelerate its ability to provide customers with any product they want, at a time and location of their convenience. The CFC model – an automated warehouse facility with digital and robotic capabilities – will be used to serve customers across Arizona. 

The new site will complement the retailer's previously announced CFC sites in Romulus, Mich.; 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 continues to accelerate the expansion of our national network to redefine the customer experience," said 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."

"With Kroger we are developing a game-changing ecosystem for serving online grocery to customers across the U.S. This includes Ocado's automated CFCs across a range of sizes, as well as software to optimize fulfilment in stores for curbside pickup," said Luke Jensen, CEO of Ocado Solutions. "Powered by Ocado's state-of-the-art, proprietary technologies, this site will be crucial in bringing unrivaled online grocery experiences to homes across Arizona and wider geographies."