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Kroger Beefing Up Its Online Business With Three New Fulfillment Centers

By Rhian Hunt – Jun 5, 2020 at 6:23PM

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The centers are being set up in partnership with British robotic-warehouse company Ocado.

Grocery and drugstore chain Kroger (KR -1.41%) revealed its plans to build a trio of new Customer Fulfillment Centers (CFCs) across the U.S. to support the company's online business. The distribution centers will stand in the Great Lakes, West, and Pacific Northwest areas. CEO Luke Jenson of Ocado Group (OCDO -0.75%), its partner in the project, says this is part of Kroger "building an e-commerce ecosystem across the U.S. that will deliver unrivaled online experiences to more customers, in more ways and in more markets."

The exact sites chosen for the three fulfillment centers have not yet been made public. The size of each is tailored to the expected distribution needs of each region.

The Great Lakes center will be the smallest, at 150,000 square feet, while the Pacific Northwest CFC will be a medium-sized 200,000 square feet. The largest of all is the West distribution center, at a full 300,000 square feet.

The earth with boxes, an airplane, and a deliver truck in front of it.

Image source: Getty Images

Overall, the centers will generate approximately 1,000 new jobs among them. Kroger's supply-chain VP Robert Clark says the facilities will use "advanced robotics technology."

Ocado Group is a British online supermarket that's developed specialized automation for online grocery orders and the robotic warehouses that will fulfill them. It's been making this technology available to Kroger since May 2018, when the two companies first inked a deal involving construction of up to 20 Kroger CFCs in the United States.

Kroger, like many grocery companies, saw its sales rise during the COVID-19 pandemic, hiring 140,000 additional workers to meet demand. With e-commerce booming even as the outbreak apparently ebbs, Kroger says the new centers will help it "reach more geographies with Ocado's automation, while also catering to a wide range of options for delivery."

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Kroger Co. Stock Quote
The Kroger Co.
KR
$44.86 (-1.41%) $0.64
Ocado Group plc Stock Quote
Ocado Group plc
OCDO
$553.40 (-0.75%) $-4.20

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