Kroger and Ocado have confirmed Phoenix, Arizona as the location for one of its 10 announced Customer Fulfillment Centres (CFC). We look at where the two companies will be aiming to grow their share of the US online grocery market.
Supporting Fry's and Fry's Marketplace banners
Last year, Kroger announced that it would open new facilities in the Great Lakes, Pacific Northwest and Southwest regions as part of its strategic partnership with Ocado. Confirming Phoenix as the Southwest location, the facility will enable Kroger to support customers in the region, where it operates 126 stores mainly under the Fry’s and Fry’s Marketplace banners. At 200,000 sq ft the CFC will be among the smallest of the 10 announced to date, highlighting the flexibility of the Ocado model. It is expected to open 24 months after the site breaks ground.
Understanding the Ocado model
This forms part of Kroger’s plans to develop up to 20 CFCs as part of its strategic partnership with Ocado. The recent boost to grocery ecommerce given by the coronavirus pandemic will have provided some affirmation to the retailer’s plans, which have often been considered bold in scope and ambition. Developing this fulfillment model will be a key part of Kroger’s strategy to build a large, sustainable and profitable model for grocery ecommerce. The CFC will also enable Kroger to expand its reach in the Arizona market, beyond where it currently operates stores. For suppliers, understanding the Ocado model and any unique data and packaging requirements is critical.
- Monroe, Ohio – this 335,000 sq ft facility will be located close to the retailer’s Cincinnati HQ and is set to become operational this year
- Groveland, Florida – this 375,000 sq ft site is also expected to become operational this year. It is unique among the locations announced to date as the retailer does not operate any stores in Florida. Last year it divested its stake in Lucky’s Market, a natural and organic specialist that had expanded in the region with Kroger’s support
- Forest Park, Georgia – 375,000 sq ft, expected to become operational in early 2022. Kroger has a strong physical presence in the region
- Dallas, Texas – 350,000 sq ft, expected to become operational in early 2022. Kroger has a solid presence in Texas overall, but significantly stronger in Houston than Dallas
- Pleasant Prairie, WI – 350,000 sq ft, expected to become operational in late 2022, core Kroger territory, driven by its acquisition of Roundy’s in 2015
- Frederick, Maryland – 350,000 sq ft, expected to become operational in early 2023. The retailer has a strong presence in Washington and Baltimore through its Harris Teeter business, but no real presence in the Philadelphia market
- Romulus, Michigan – 135,000 sq ft site, expected be operational in 2023 or earlier
- Phoenix, Arizona - 200,000 sq ft site, expected to be operational in 2023 at the earliest
- South – 200,000 sq ft site, location TBC, expected to be operational in 2023 or earlier
- Pacific Northwest – 200,000 sq ft site, potential to sited in Washington state and to be operational in 2023 at the earliest
Source: IGD Research, Map Data © 2021 Google
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