April 14, 2021

KrogerOcado400x275The Kroger Co. has launched its first Customer Fulfillment Center (CFC) in the U.S., combining vertical integration, machine learning, and robotics to provide customers with affordable, friendly and fast delivery of fresh food. Powered by Ocado Group, the CFC is located in Monroe, Ohio, a city north of Cincinnati. 

“2020 was a pivotal year for grocery e-commerce, with Kroger’s digital business scaling to over $10 billion – and achieving a record digital sales increase of 116%,” said Rodney McMullen, Kroger’s chairman and CEO. “We’re incredibly proud to achieve this milestone that advances our position as one of America’s leading e-commerce companies. The momentum we’re experiencing is well-timed with the evolution of Kroger Delivery, underpinning the permanent shift in grocery consumer behavior and need for enterprising and modern e-commerce and last-mile solutions – today’s true competitive horsepower.”

In May 2018, Kroger and Ocado formed an exclusive partnership to introduce to the U.S. proprietary technology solutions focused on artificial intelligence, advanced robotics and automation to create more efficient fulfillment, picking and delivery capabilities. Kroger said this gives customers anything, anytime, and anywhere access to groceries, and also expands Kroger’s reach and products to new geographies.

“The introduction of the first Customer Fulfillment Center marks a historic milestone for grocery retail in the U.S.,” said Tim Steiner, co-founder and CEO of Ocado Group. “Since signing our partnership in 2018, Ocado and Kroger teams have worked in tight-knit collaboration to lay the foundation to advance their state-of-the-art fulfillment ecosystem across the country, supporting Kroger to reach customers anywhere with anything, at any time.”

Kroger Delivery is a vertically integrated network enabling coverage of up to 90 miles from the hub location, and significantly more territory when spoke locations are integrated. In the highly automated CFSs, more than 1,000 robots move around giant 3D grids, orchestrated by a proprietary control system within the unlicensed spectrum. The grid, known as “The Hive,” contains totes with products and ready-to-deliver customer orders.

KrogerOcadoCart800pxAs customers’ orders near their delivery times, the robots retrieve products from The Hive and are presented at pick stations for items to be sorted for delivery, governed by algorithms that ensure items are intelligently picked, Kroger said. For example, this means fragile items are placed on top, and bags are evenly weighted, and each order is optimized to fit into the lowest number of bags.

After orders are packed, they are loaded into a temperature-controlled Kroger Delivery van, which can store up to 20 orders. Machine learning algorithms then dynamically optimize delivery routes, considering factors such as road conditions and optimal fuel efficiency.

The Monroe CFC measures 375,000 square feet, and carries thousands of popular grocery products. The delivery network will also include smaller facilities as well as spoke locations. The goal is to have the CFC fulfill thousands of orders per day, with the capability to support the fulfillment of pickup orders.

Additional locations are also planned – Groveland, Florida (west of Orlando) is expected to open this spring; and Kroger has announced plans to open CFCs in Dallas, Forest Park, Ga.; Frederick, Maryland; Phoenix, Ariz.; Pleasant Prairie, Wisc., and Romulus, Mich.; as well as the Pacific Northwest and West regions. Kroger said as the network expands, additional locations will be announced.

The system also relies on several human resources as well, Kroger added. At every CFC, on-site associates will support delivery operations to help process, package and load orders. The Monroe CFC will employ nearly 400 associates, with roles focusing on customer service and engagement, engineering, operations, inventory and quality management, and transportation.

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"Kroger is uniquely positioned to transform grocery e-commerce because of our innovative and knowledgeable delivery associates' commitment to providing fresh food and delivering a rewarding customer experience," said Kroger's McMullen. "Kroger Delivery brings together the expertise of our team and the efficiency of technology to create an in-stock, fresh and friendly experience for every customer, every time."

As part of Kroger's commitment to provide a differentiated and affordable grocery delivery experience for customers, the company said Kroger Delivery will offer variable delivery fees that do not require customers to provide a tip and are influenced by a number of factors like a customer's loyalty, delivery window popularity, route optimization as well as the lead time of an order. Variable delivery fees will allow Kroger Delivery to provide additional discounted options where it has the flexibility, creating a personalized offering and delivering value to customers in ways that matter to them.

For more details on Ocado's automation systems, visit its website. For further information about Kroger, visit its corporate website.

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