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October 13, 2021

Kroger Targets Northeast with Ocado-Supported Delivery

Posted In: Retail Articles

By Mike Duff

Contributing Editor

As it expands its delivery capacity, The Kroger Co. has announced it will, for the first time, enter the Northeast with customer fulfillment centers powered by Ocado Group automated warehouse technology and so establish operations in a region where it has been absent.

Kroger didn’t reveal where in the region it plans to open its first customer fulfillment center, but a spokesman did tell HomePage News that, when operational, it would “be servicing New York, New Jersey and Connecticut.”

In addition to the Northeast, the expansion will include the addition of two fulfillment centers in California, where the medium- and smaller-sized facilities will meet the need for same-day and next-day grocery delivery demand. Also, Kroger will enter South Florida with two smaller-sized fulfillment facilities. The retailer’s Ocado fulfillment centers launched Kroger Delivery in Central Florida earlier this year, and the operation has ramped up faster than expected, the company stated, encouraging the retailer to consider additional ways of executing and operating. The result has been high customer repeat rates and net promoter scores, Kroger asserted.

The new South Florida fulfillment centers will join the existing Central Florida Groveland facility as well as sites in Jacksonville and Tampa, Kroger noted. When in operation, the two new fulfillment centers will allow Kroger Delivery to serve customers in as fast as 30 minutes with a selection of 10,000 fresh food items and everyday essential products, and to deliver same-day and next-day orders extending to 35,000 items.

In Kroger’s September 10 second-quarter conference call, Rodney McMullen, Kroger’s chairman and CEO, pointed out that the company, with its Ocado-powered fulfillment centers in operation, the company had launched unlimited customer deliveries for $79 per year. He said customers are commenting positively on the company’s friendly, professionally trained drivers and the refrigerated delivery vans that drop off fresh food on their doorsteps. He added that Kroger remained on track to open a total of six customer fulfillment centers between 2022 and 2023.

In announcing the current expansion initiative in the Northeast, California and Florida, McMullen said, “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. 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.”

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