Kroger and Ocado will open the first of up to 20 planed Customer Fulfillment Centres (CFC) in Monroe, Ohio.
Optimising Kroger’s density in the region
Earlier this year, the retailers formed a strategic partnership to optimise Ocado’s technology solutions for its ecommerce operations. The first CFC will be located north of Cincinnati, where Kroger is based. The retailer has significant density in this area, including in the Cincinnati, Indianapolis, Columbus and Louisville markets and has been the location for several of its pilots. It was one of the first areas to test its store-based grocery pickup programme and is near the Walgreens stores which are testing the pickup of Kroger online orders. Commenting on the plans, Rodney McMullen, Kroger’s chairman and CEO, stated,
”Kroger is joining with the best partners in the world to co-innovate and leverage technology to redefine the customer experience. We are incredibly excited to partner with Ocado to transform the industry and deliver on our Restock Kroger vision to serve America through food inspiration and uplift. This Kroger shed, powered by Ocado, will accelerate our ability to provide customers with anything, anytime and anywhere."
Ecommerce sales forecast to exceed $5bn
The CFC will be an automated warehouse facility with digital and robotic capabilities, enabling for next-generation automated storage and retrieval. Kroger is investing $55m to build the first facility, which will measure 335,000 sq ft and is expected to generate more than 410 new jobs. It is likley to come on-stream in 2020. Kroger is investing across the business to drive its ecommerce operations, which are expected to generate sales in excess of $5bn this year. It has launched several new initiatives and pilots this year including a next-day, nationwide delivery program, Kroger Ship, driverless deliveries in partnership with Nuro and voice-enabled ordering. It has also expanded its store pickup programme to over 1,600 locations and has partnered with Instacart to offer same-day delivery. These align with its ‘Available, Accessible, Relevant’ three-pillar strategy for the channel.
Enhancing ecommerce operations with technology
The US ecommerce channel is seeing significant investment currently as retailers look to grow their operations and enhance the efficiency of their operations. Recently, Walmart launched a store-based automated facility for grocery ecommerce in New Hampshire while Ahold Delhaize and Albertsons are partnering with Takeoff Technologies to develop hyperlocal, automated mini-fulfillment centres within their stores. By 2023, we forecast the channel will account for 3.5% of the market, growing to almost $60bn.
IGD Retail Analysis subscribers can access our new report on the channel, detailing its development and the growth opportunities at The US online grocery channel 2018.
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