Kroger Co. will enter the state of Oklahoma with its latest customer fulfillment center.
Cincinnati-based Kroger (NYSE: KR) will build what it calls a spoke facility in Oklahoma City powered by Ocado Group, the British online grocery retailer. Kroger, a nationwide supermarket operator that runs Pick 'n Save and Metro Market stores in the Milwaukee area, is building a large Ocado-powered distribution center in Pleasant Prairie that's expected to open early this year.
The expansion follows Kroger’s entry into Florida in 2021, where the company has one store, an Ocado facility and a growing number of “spoke” facilities.
Gabriel Arreaga, senior vice president and chief supply chain officer for Kroger, said the Oklahoma City facility is “an integral part of our strategy to achieve the doubling of our digital sales and profitability rate by the end of 2023.”
“The spoke facility will provide unmatched, impeccable customer service and improve direct access to fresh food in areas eager for the variety and value offered by Kroger,” Arreaga said in a news release.
Kroger will build a 50,000-square-foot spoke facility located at 8801 North I-34 Service Road. This smaller spoke facility will work with the larger customer fulfillment center hub in Dallas, serving as a last-mile, cross-dock location that expands Kroger’s grocery delivery serves and extends its reach to customers up to 200 miles from the hub. The Oklahoma City facility is expected to be operational later this year and will employ up to 191 full-time employees.
This is the latest extension of Kroger’s partnership with Ocado. In 2018, the companies announced a collaboration to establish a delivery network that combines artificial intelligence, advanced robotics and automation. Rodney McMullen, Kroger’s chairman and CEO, said Kroger Delivery “underpins the permanent shift in grocery consumer behavior and elevates our position as one of America's leading e-commerce companies.”
Using its delivery network, Kroger now primarily serves customers in Florida without traditional brick-and-mortar stores. Arreaga said the Monroe and Groveland, Fla. Customer fulfillment centers, also called “sheds,” are exceeding internal expectations. Kroger also recently opened a facility in Forest Park, Georgia.
At the hub sites, more than 1,000 robots move through giant 3D grids. The grid, known as “the Hive,” contains totes with products and ready-to-deliver customer orders.
When customers’ orders near delivery tome, the bots get products from the Hive and are presented at pick stations for items to be sorted for delivery. The process uses algorithms to ensure items are intelligently packed, such as fragile items being placed on top, bags are evenly weighted and orders are optimizes to fit into the lowest number of bags.
The orders are then loaded into a temperature-controlled delivery van that can hold up to 20 orders. The vans’ delivery routes are optimized and can travel up to 90 miles with orders from the facilities.
Kroger launched a $35 million, 335,000-square-foot automated warehouse and distribution center using Ocado technology in Monroe, Ohio, about 30 miles north of Kroger’s headquarters, in March 2021.
The Dallas and Pleasant Prairie fulfillment centers are expected to open this spring with additional customer fulfillment centers slated for California; Frederick, Maryland; Phoenix; Romulus, Michigan; as well as South Florida and the Northeast and West.
Kroger is the nation’s largest traditional grocer. It operates 2,750 grocery stores under a variety of banner names, as well as 35 food production or manufacturing facilities.
