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06/21/2022

Kroger Expands Fulfillment Network Out West

Food retailer reveals plans for new customer fulfillment center in Denver metro area
Marian Zboraj
Digital Editor
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Kroger Is Building a Grocery Ecosystem for the Future
Kroger’s new customer fulfillment center in Aurora, Colo., will be powered by the Ocado Group.

The Kroger Co. is continuing to offer more Americans delivery through new high-tech customer fulfillment centers. The food retailer's latest e-commerce expansion will take place in Aurora, Colo., with a new fulfillment center powered by the Ocado Group.

The groundbreaking for the nearly 300,000-square-foot distribution facility will occur soon. Once completed, it will bring nearly 400 new jobs to Aurora and adjacent communities.

"We are thrilled to expand and introduce our innovative Kroger fulfillment network to one of the fastest-growing areas in the country and have the opportunity to grow our workforce," said Gabriel Arreaga, Kroger's SVP and chief supply chain officer. "Through the incredible partnership and support from the city of Aurora and Adams County, Kroger Delivery can accelerate its commitment to provide exceptional customer service through our state-of-the-art facility and end-to-end cold solutions, including custom-built refrigerated vans, to ensure our delivery customers receive the freshest products directly to their doorstep throughout the Denver region."

This expansion represents an extension of a partnership between Kroger and Ocado, a U.K.-based tech provider for grocery e-commerce. In 2018, the companies revealed a collaboration to establish a delivery network that combines artificial intelligence, advanced robotics and automation in a new way, bringing first-of-its-kind technology to the United States.

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. As customers' orders near 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 ensure 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. Machine-learning algorithms optimize delivery routes, considering factors like road conditions and optimal fuel efficiency. Drivers may travel up to 90 miles with orders from facilities to make deliveries.

"Adams County is excited to have this new state-of-the-art food distribution facility opening in our community," said Lynn Baca, chair of the Adams County Board of Commissioners. "Not only will it showcase innovative sorting technology, it will also help provide greater access to high-quality food and fresh produce for our residents. Providing a delivery option will also benefit those in our community who may have mobility issues or simply lack the time to go into a physical location."

Kroger currently operates customer fulfillment centers in Monroe, Ohio; Groveland, Fla.; Forest Park, Ga. (Atlanta); Dallas; and Pleasant Prairie, Wis. 

In addition to expanding its fulfillment capabilities across the United States, Kroger recently said that it's expanding its loyalty program across the country. The Boost membership program offers customers two membership levels and includes such benefits as 2X fuel points earned on every dollar spent, extra savings on Kroger's private brands, and free two-hour or next-day delivery. Kroger expects to make a big difference for price-conscious shoppers by taking its loyalty program nationwide.

Serving 60 million households annually nationwide through a digital shopping experience, and almost 2,800 retail food stores under a variety of banner names, Cincinnati-based Kroger is No. 4 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.

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