Kroger Halts Expansion of E-Commerce Fulfillment Centers

Looking Ahead With 97% of its 2,700 U.S. stores capable of fulfilling orders, Kroger is well-positioned to continue serving its customers effectively. This decision results in the closure of several facilities, including a spoke facility in Tennessee, effective February 1, 2026. Additionally, the company has decided to cancel the establishment of a new CFC in Charlotte, which was initially slated for 2026.

Kroger, one of the largest supermarket chains in the United States, has announced the cessation of its plans to expand its e-commerce Customer Fulfillment Centers (CFCs). This decision results in the closure of several facilities, including a spoke facility in Tennessee, effective February 1, 2026. Additionally, the company has decided to cancel the establishment of a new CFC in Charlotte, which was initially slated for 2026.

Closure of Current Facilities

As part of the strategic shift, Kroger will close three automated fulfillment centers located in Pleasant Prairie, Wisconsin; Frederick, Maryland; and Groveland, Florida. These closures are planned for January 2026. The company also intends to shut down three spoke centers in Florida and a facility in Alexandria, Virginia. Meanwhile, the Nashville spoke, which opened in mid-2022, will also be affected by these closures.

Despite these closures, a CFC in Forest Park, Georgia remains operational. The company has also been jointly operating CFCs in Ohio, Texas, Colorado, and Michigan, with plans to expand the capacity of the Detroit CFC.

Partnership with Ocado

Kroger's partnership with Ocado Group began in 2018, aiming to revolutionize grocery delivery in the United States. However, only eight out of the 20 planned locations have been built. The company has utilized Ocado's technology, including the AutoFreezer technology in its Phoenix CFC, to enhance its delivery capabilities.

While some expansion plans have been halted, Kroger continues to leverage Ocado's technological advancements within its operational centers. This strategic move aligns with the company's broader shift towards a hybrid e-commerce model.

Transition to Third-Party Partnerships

In light of the halted expansion, Kroger is increasingly focusing on partnerships with third-party delivery services. The company is expanding its collaboration with DoorDash and has also partnered with Uber Eats and Instacart for express delivery services. These partnerships aim to enhance Kroger's ability to fulfill orders promptly, with the capacity to deliver in under two hours.

Kroger is also integrating Instacart's AI assistant to streamline the shopping experience for its customers. This approach reflects Kroger's strategy to adapt to the evolving demands of the e-commerce landscape while maintaining operational efficiency across its network.

Looking Ahead

With 97% of its 2,700 U.S. stores capable of fulfilling orders, Kroger is well-positioned to continue serving its customers effectively. The company's decision to halt the expansion of its fulfillment centers signifies a strategic pivot towards optimizing its existing infrastructure and enhancing its partnerships with third-party providers.

As the landscape of e-commerce continues to evolve, Kroger's adaptability and willingness to embrace new models of operation will be crucial in maintaining its competitive edge in the grocery industry.