GROVELAND, Fla. — The Kroger Co. (NYSE: KR), America’s largest grocery retailer, today announced the opening of the Customer Fulfillment Center (CFC) in Groveland, FL powered by Ocado Group (LSE: OCDO), a world leader in technology for grocery e-commerce. This marks Kroger’s entry into the Florida market with an e-commerce delivery service that combines vertical integration, machine learning, and robotics with affordable, friendly, and fast delivery of grocery items and fresh food.
“The Kroger Delivery network combines the efficiency of technology with the experience of our associates to deliver fresh, affordable food, and a consistent and rewarding customer experience,” said Gabriel Arreaga, Kroger’s chief supply chain officer. “We’re proud to launch Kroger Delivery in Florida, a new geography for Kroger and a milestone moment in our history to further build on our success as one of America’s leading retailers and e-commerce companies.”
“Groveland is excited to welcome Kroger to our family!” said Evelyn Wilson, mayor of Groveland. “The combination of their contributions to the community, coupled with their corporate culture and values, make them an ideal partner with our charming city. I look forward to a long and prosperous relationship.”
“Kroger is uniquely positioned to transform grocery e-commerce in Florida because of our differentiated offering that brings high-quality fresh groceries directly to our customers’ doorstep. The service features fresh food, adult beverage, and personal care products, affordable prices and promotions, and a best-in-class fuel rewards loyalty program,” said Bill Bennett, Kroger’s vice president of e-commerce. “This innovative, customer-centric offering is delivered by our professionally trained and friendly Kroger Delivery associates, providing our customers with anything, anytime, anywhere and broadening our reach and products to new geographies.”
“We are pleased Kroger selected the Tampa Bay and Hillsborough County regions to expand the company’s e-commerce reach in the State of Florida,” said Pat Kemp, chair of the Hillsborough County Board of County Commissioners. “Kroger will be an integral part of our community as they expand and grow here. We look forward to providing them the partnership and supportive environment needed to develop a talented workforce and successful business operations.”
“Every citizen in Jacksonville should have access to affordable, healthy, and fresh foods,” said Lenny Curry, mayor of Jacksonville. “We welcome Kroger into our community and are very encouraged that this delivery service will fill an important gap for people who don’t have easy access to groceries.”
Kroger Delivery Customer Experience
After placing an order via Kroger.com or the Kroger app, customers in regions where a CFC is located have groceries delivered by a knowledgeable Kroger Delivery associate in a temperature-controlled van. The associate delivers industry-leading customer service, including ensuring order freshness and satisfaction, managing order changes, and informing customers of loyalty membership benefits like earned fuel points through a partnership with Shell® and digital coupon savings.
As part of Kroger’s commitment to provide a differentiated and affordable grocery delivery experience for customers, 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, and order lead time. 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.
Kroger Delivery Operations
In May 2018, Kroger and Ocado formed an exclusive partnership to introduce to the U.S. for the first-time proprietary technology solutions focused on artificial intelligence, advanced robotics and automation, and creative solutions to create efficient fulfillment and delivery capabilities.
The Groveland CFC measures 375,000 square feet, carries thousands of popular grocery products, and represents one of the models engineered for the flexible Kroger Delivery network, which will also include smaller automated facilities and spoke locations. The CFC can fulfill thousands of orders per day. The Groveland CFC and spoke in Tampa are now open, with the Jacksonville spoke scheduled to open this month. The Groveland CFC joins the Monroe, OH CFC which opened earlier this spring.
Kroger Delivery is a vertically integrated network, enabling coverage of up to 90 miles from the hub location in Groveland and significantly more territory when spoke locations, such as Tampa and Jacksonville, are integrated. In these highly automated Customer Fulfillment Centers, 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 their delivery times, the bots retrieve products from The Hive which are presented at stations for items to be sorted for delivery, a process governed by algorithms that ensures items are intelligently sorted. For example, fragile items are placed on top, bags are evenly weighted, and each order is optimized to fit into the fewest number of bags, reducing plastic use.
Once completed, orders are loaded into a temperature-controlled Kroger Delivery van, which can store up to 20 orders. Powerful machine learning algorithms dynamically optimize delivery routes, considering factors like road conditions and optimal fuel efficiency.
“We’re proud to help bring Kroger to Florida with Ocado’s state-of-the-art technology,” said Luke Jensen, CEO of Ocado Solutions. “Kroger and Ocado’s unique partnership is opening up new possibilities online for U.S. grocery customers and we can’t wait for households across Florida to experience amazing levels of service and freshness online with Kroger Delivery.”
“We are excited to bring Kroger’s exclusive brands, including Simple Truth®, the country’s largest natural and organic private label, and Private Selection® to Florida,” said Brandon McBurney, Kroger’s general manager of the Groveland Customer Fulfillment Center. “Kroger Delivery provides reliably fresh food in a convenient, innovative way. Kroger Delivery will introduce Kroger to new audiences, accelerate our e-commerce capabilities, focus on outstanding customer experiences, and create hundreds of new career opportunities.”
Kroger Delivery Associate Experience
Talent on Kroger’s supply chain, technology and digital, data and analytics, human resources, operations, and merchandising teams are partnering to design the Kroger Delivery network. At every CFC, on-site associates support delivery operations and help process, package, and load orders. The Groveland CFC employs nearly 400 associates, with roles focusing on customer service and engagement, engineering, operations, inventory and quality management, and transportation. The spoke locations will each employ nearly 180 associates. Earlier this week, The Kroger Family of Companies announced it is hiring for 10,000 open roles. To view available careers, visit Jobs.Kroger.com.
About Kroger
At The Kroger Co. (NYSE: KR), we are dedicated to our Purpose: to Feed the Human Spirit™. We are, across our family of companies, nearly half a million associates who serve over nine million customers daily through a seamless digital shopping experience and 2,800 retail food stores under a variety of banner names, serving America through food inspiration and uplift, and creating #ZeroHungerZeroWaste communities by 2025. To learn more about us, visit our newsroom and investor relations site.
About Ocado Group
Ocado Group is a UK based technology company admitted to trading on the London Stock Exchange (Ticker OCDO). It provides end-to-end online grocery fulfillment solutions to some of the world’s largest grocery retailers and holds a 50% share of Ocado Retail Ltd in the UK in a Joint Venture with Marks & Spencer. Ocado has spent two decades innovating for grocery online, investing in a wide technology estate that includes robotics, AI & machine learning, simulation, forecasting, and edge intelligence.
Safe Harbor Language
This press release contains certain statements that constitute “forward-looking statements” about the company’s operations. These statements are based on management’s assumptions and beliefs in light of the information currently available to it. Such statements are indicated by words or phrases such as “achieve,” “believe,” “contemplates,” “continue,” “deliver,” “expect,” “future,” “guidance,” “strategy,” “target,” “trends,” and “will.” Various uncertainties and other factors could cause actual results to differ materially from those contained in the forward-looking statements. These include the specific risk factors identified in “Risk Factors” in our annual report on Form 10-K for our last fiscal year and any subsequent filings, as well as our performance, including our ability to successfully execute our e-commerce strategy. Kroger assumes no obligation to update the information contained herein. Please refer to Kroger’s reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties.
