Kroger and Ocado will open the second and third of 20 Customer Fulfillment Centres (CFC) in Central Florida and Mid-Atlantic.
Optimising new technologies
Ecommerce has been a major focus for Kroger over the last year. In 2018, Kroger announced a strategic partnership with Ocado which will see them jointly develop up to 20 automated fulfilment centres for grocery ecommerce in the US. These will optimise Ocado’s technology-led solutions. The deal gives Kroger the rights to use Ocado’s technology for grocery and other food distribution related activities in the US on an exclusive basis.
Following the announcement of the building of the first CFC in Monroe, Ohio in November 2018, the retailers are set to open two more along the East Coast. The same CFC model (an automated warehouse facility with digital and robotic capabilities), will be replicated for the two new CFCs. Through its robotic Customer Fulfillment Centres, Ocado believes that it can significantly lower the time and cost to pick an order, versus store-based picking.
Alex Tosolini, senior vice president of new business development at Kroger, commented: "Kroger is developing the retail model of the future through our exciting partnership with Ocado, a UK-based company with global ties. We will co-innovate with Ocado to develop the best possible experiences for our customers, leveraging advanced robotics technology and creative solutions”.
Entering new markets
The first CFC is located north of Cincinnati, where Kroger is based. The retailer has significant density in this area, including in the Indianapolis, Columbus and Louisville markets. However, Kroger does not currently operate any of its own stores in Florida. The strategic partnership with Ocado is enabling Kroger to expand into new areas and reach different customers. The opening of the new CFC in the area will enable Kroger to enter into a new market.
Retail Analysis subscribers: read our insight reports, Strategic Outlook for Kroger and Strategic Outlook for Ocado to learn more.