Kroger is broadening its delivery services with the opening of a customer fulfillment center in northeast Ohio.
“Kroger is incredibly excited to expand our delivery business in our home state and provide northeast Ohioans access to thousands of fresh and popular products, including our industry-leading Private Selection and Simple Truth brands, through our customer fulfillment center” Gabriel Arreaga, Kroger’s senior vice president and chief supply chain officer said. “The Cleveland region facility is an accelerant to our strategy to achieve the doubling of our digital sales and profitability rate by the end of 2023, and we’re eager to provide a rewarding experience for our new customers in northeastern Ohio and Pennsylvania and create new jobs for individuals passionate about technology, engineering, operations, logistics and transportation, inventory and quality management and customer service and engagement.”
The facility, which will be powered by the Ocado Group, will combine vertical integration, machine learning and robotics to provide an affordable, friendly and fast fresh food delivery service as part of the company's seamless ecosystem, the company said.
“We are excited to bring Kroger and Ocado's second automated warehouse to Ohio. As this site develops and goes live, it will be instrumental in delivering fantastic grocery experiences and exciting job opportunities to households across Cleveland, Pennsylvania and beyond,” Luke Jensen, CEO of Ocado Solutions said. “Today’s announcement marks another milestone to developing Kroger’s seamless fulfillment ecosystem across the United States. Ocado’s proven technology will allow Kroger to achieve the lowest cost-to-serve in the market, combined with the best freshness, accuracy and service in grocery delivery.”
The customer fulfillment center will measure 270,000-sq.-ft., and is expected to create up to 400 new jobs, the company said.
In addition, the center is expected to become operational 24 months after the site breaks ground and will service areas in northeastern Ohio and Pennsylvania. The retailer also expressed appreciation for its partnerships with JobsOhio and Team NEO to deliver this project.
“Kroger Fulfillment Network’s cutting-edge facility will utilize the latest robotics and logistics technology, helping improve access to fresh food in communities without physical stores while creating 400 good-paying jobs,” JobsOhio president and CEO J.P. Nauseef said. “This will be Kroger Fulfillment Network’s second hub distribution facility in the state, demonstrating the advantage Ohio provides to build out the U.S. supply chain.”
The expansion in the Cleveland region represents an extension of a partnership between Kroger and Ocado, a world leader in technology for grocery e-commerce. In 2018, the companies announced a collaboration to establish a delivery network that combines artificial intelligence, advanced robotics and automation in a bold new way, bringing first-of-its-kind technology to America.
“Kroger Fulfillment Network’s decision to create a new state-of-the-art facility in northeast Ohio demonstrates that the region has favorable logistics and talent to connect technology with retail,” Team NEO CEO Bill Koehler said. “Along with our local partners, ODOD and JobsOhio, we look forward to continuing to work with the company's leadership to ensure their sustained success in northeastern Ohio.”
The delivery network relies on highly automated fulfillment centers. At the hub sites, more than 1,000 bots whizz around giant 3D grids, orchestrated by proprietary air-traffic control systems in the unlicensed spectrum. The grid, known as The Hive, contains totes with products and ready-to-deliver customer orders.
“Kroger Delivery underpins the permanent shift in grocery consumer behavior and elevates our position as one of America's leading e-commerce companies,” Kroger chairman and CEO Rodney McMullen said.
Through the hub-and-spoke delivery network, the company now serves customers in Florida, as an example, without traditional brick-and-mortar stores.
As customers' orders near their delivery times, the bots retrieve products from The Hive and are presented at pick stations for items to be sorted for delivery, a process governed by algorithms that ensures items are intelligently packed. For example, fragile items are placed on top, bags are evenly weighted and each order is optimized to fit into the lowest number of bags, reducing plastic use.
After being packed, groceries are loaded into a refrigerated delivery van, which can store up to 20 orders. Powerful machine learning algorithms optimize delivery routes, considering factors such as road conditions and optimal fuel efficiency. Vans may travel up to 90 miles with orders from the hub and spoke facilities respectively to make deliveries. Associates at the spoke facility will deliver orders within their service area, adding ZIP codes as demand grows.
Kroger unveiled its Monroe, Ohio customer fulfillment center in April 2021, its first followed by centers in Groveland, Fla.; and Forest Park, Ga. The Dallas fulfillment center is slated to open this spring with additional customer fulfillment centers slated for California; Frederick, Md.; Phoenix, Ariz.; Pleasant Prairie, Wis.; Romulus, Mich.; South Florida and in the Northeast and West.