Kroger Speeds Up Plan to Conquer America

America's largest grocery retailer is planning to deliver groceries in the Northeast for the first time, while also launching delivery in South Florida and expanding its capacity in California.

The Kroger Co. announced it will offer Kroger Delivery enabled by a customer fulfillment center (CFC) in the Northeast. The facility will be able to offer same-day and next-day grocery delivery.

Last month at the Groceryshop conference in Las Vegas, CEO Rodney McMullen spoke to his company's plans to serve new markets with faster, fresher grocery fulfillment.

"America is a pretty big map. And if you look, basically about a third of the United States, we don't operate today," he said. "For us, our aspiration is to feed America, but one step at a time."

Kroger also said it plans to expand its existing operations and boost capacity in California with the addition of two CFCs. The medium- and smaller-sized facilities will meet the need for same-day and next-day grocery delivery demand.

"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," McMullen said. "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."

Finally, Kroger said it will enter South Florida and introduce two smaller-sized fulfillment facilities. These will join the already live CFC in central Florida as well as "spoke" sites in Jacksonville and Tampa. 

"The acceleration of Kroger Delivery continues with these new facilities and our continued focus on creating career opportunities and serving customers through interconnected, automated and innovative fulfillment models that cater to different and accretive grocery shopper missions in both new and existing geographies," said Gabriel Arreaga, Kroger's SVP and chief supply chain officer. "We have a pipeline of sites in development across the U.S., with several scheduled to open next year, and we're excited to continue delivering the Kroger experience to more doorsteps."

The entry into South Florida also marks the introduction of two "Zoom" micro-fulfillment centers with Ocado, enabling Kroger Delivery to serve customers as fast as 30 minutes with a selection of 10,000 fresh food items and essentials, and to deliver same-day and next-day orders with 35,000 items.

"Kroger is also leveraging the full breadth of Ocado's fulfillment capabilities to meet the growing range of customer wants and demands," said Luke Jensen, CEO of Ocado Solutions. "Alongside the current rollout of our automated facilities and software to optimize fulfillment in stores for curbside pickup, today's announcement of a further CFC in Florida and the introduction of our first 'Zoom' micro fulfillment site in the U.S., serving the immediacy market, is a testament to the breadth and flexibility of the offering we are helping to bring to Kroger shoppers. These fulfillment centers will also benefit from significant upstream efficiencies, with the existing CFC in Groveland able to act as a major supply hub into the new Florida sites."

Kroger Delivery currently operates CFCs in Groveland, Fla., and Monroe, Ohio, and in addition to the newly announced five facilities, Kroger Delivery is slated to open previously announced sites in Dallas, Texas; Forest Park, Ga. (Atlanta); Frederick, Md.; Phoenix, Ariz.; Pleasant Prairie, Wis.; Romulus, Mich. (Detroit); and sites in the South, West and Pacific Northwest. As the Kroger Delivery network expands, Kroger will announce new facilities and plans, the company said.

"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," McMullen added.

Cincinnati-based Kroger is No. 3 on The PG 100, Progressive Grocer’s 2021 list of the top food and consumables retailers in North America.