The first customer delivery has been made from the first CFC to open as part of the strategic partnership between Kroger and Ocado. This represents a soft launch for the facility, which will be marked by a grand opening in April.
First of two planned sites expected to open this year
This first delivery marks an important milestone in the Kroger Ocado partnership. Fulfilled by the Customer Fulfillment Centre (CFC) in Monroe, Ohio, it comes almost three years since the companies announced their strategic partnership. The CFC, which is just under 40KM from Kroger’s HQ in Cincinnati, is the first of ten announced locations to go live. The companies plan to develop up to 20 sites, with the scale of the partnership ensuring exclusivity for America’s second larger retailer. The second CFC is on-track to open in Florida later this year.
Accelerated ecommerce growth
The launch of the CFC significantly expands Kroger’s capacity in the region at a time when the grocery ecommerce channel continues to experience elevated demand. Kroger's digital sales increased 118% in the quarter, with delivery up 249%. We estimate that sales last year increased 91.5%, with the channel on-track to grow to $82.0bn by 2022. Most traditional grocers have capitalised through an omnichannel approach, increasing the number of stores offering click and collect and growing their partnerships with on-demand delivery companies. Beyond pureplay operators, Kroger will be the first to operate a centralised automated facility for grocery ecommerce. However, automation has been gaining ground through micro-fulfillment centres, with companies including Takeoff Technologies, Dematic and Fabric attracting new partners.
- 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
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