Grocery retailer Kroger is continuing its rapid advancement of online grocery options, announcing that it is expanding its fulfillment network to three new cities this year.
Speaking at a business update meeting in Orlando, Florida, on Friday, Kroger officials said the company would open fulfillment centers in Austin and San Antonio, Texas, and Birmingham, Alabama. Similar to its previous expansion into Florida, the (NYSE: KR) fulfillment centers will handle e-commerce grocery without a physical store nearby.
The Ocado Group (LSE: OCDO) will provide the technology inside the facilities.
“Kroger today looks very different than it did in 1883 when we opened our first store. But the core principles that made that store successful — service, selection, value and our commitment to our customers — remain the bedrock of our business,” said Rodney McMullen, Kroger’s chairman and CEO, in a statement.
Kroger has fulfillment centers in Monroe, Ohio; Groveland, Florida; and Forest Park, Georgia. Additional centers are slated for California; Frederick, Maryland; Phoenix; Pleasant Prairie, Wisconsin; and Romulus, Michigan. Additional facilities will be planned in South Florida as well as the Northeast and West. In all, Kroger anticipates opening 17 new fulfillment centers in the next 24 months.
“I’m incredibly excited for the future of Kroger, and both thriving physical stores and digital solutions are part of it,” Mullen added. “We continue to feel great about the momentum we’re experiencing with Kroger Delivery and our partnership with Ocado, supporting Kroger in strategically leveraging our unique assets to expand in existing regions, including Atlanta, Cincinnati and Dallas, as well as enter into new geographies like Austin, Birmingham, Cleveland, Oklahoma City, Orlando, San Antonio, South Florida, and the Northeast through a flexible network of differently sized, high-tech facilities operated by friendly and knowledgeable associates.”
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The new Kroger fulfillment centers, which range from 50,000 square feet to 70,000 square feet, will feature automation and more than 1,000 bots navigating 3D grids known as The Hive. Each hive includes totes and products for customer orders. As the customer’s delivery time nears, the bot will retrieve the totes and move them to pick stations to be sorted for delivery.
Refrigerated delivery vans make the deliveries within a 90-mile radius. Each van can store up to 20 orders.
On March 3, Kroger reported digital sales grew 105% over two years.
The company has been heavily involved in securing its future, investing heavily and testing new technologies, including drone delivery and autonomous delivery vehicles.
The drone service, provided by Drone Express, a division of Telegrid Technologies, is transporting items up to 5 pounds from the Kroger store located at Centerville Kroger Marketplace in Centerville, Ohio.
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In January, Kroger announced an expanded partnership with Nuro, which makes autonomous delivery vehicles. That partnership features a third-generation Nuro vehicle making deliveries in the Houston area. Kroger and Nuro first tested autonomous deliveries in 2018.
“Our expanded collaboration with Nuro supports Kroger’s commitment to provide fresh food, at a great value — all without asking our customers to compromise,” said Yael Cosset, Kroger’s senior vice president and chief information officer. “The role of autonomous vehicles in our seamless ecosystem continues to increase, contributing to meeting our customers in the context of their day without compromising on the quality or value, while contributing to our long-term growth and sustainability goals.”
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