Kroger Transitions to Hybrid E-Commerce Model, Closes Fulfillment Centers

E-Commerce Growth and Market Trends Kroger's e-commerce sales increased by 16% in the second quarter, marking five consecutive quarters of double-digit growth. Despite current unprofitability, Kroger's e-commerce sales have grown 16% in Q2, with plans to open new centers in Charlotte and Phoenix in fiscal 2026. The closure of these facilities will result in significant job cuts, affecting a total of 468 employees.

Kroger has announced a strategic shift in its e-commerce operations, establishing a new division dedicated to online grocery sales. This transition to a hybrid e-commerce model is designed to enhance efficiency and improve the online shopping experience for its customers.

New E-Commerce Division

The newly established e-commerce division at Kroger is set to focus on integrating advanced technology into grocery sales. This move underscores the company's commitment to prioritizing e-commerce growth within its overall business model. By combining traditional and online grocery services, Kroger aims to adapt to changing consumer shopping preferences and bolster its presence in the digital market.

"Innovation in e-commerce is crucial for retail industry growth," a Kroger spokesperson emphasized, highlighting the importance of this transition.

Despite its current unprofitability, Kroger's e-commerce business has been experiencing significant growth. The company's digital sales growth has consistently outpaced its same-store sales growth, indicating a strong upward trend in online shopping demand.

Closure of Fulfillment Centers

As part of its strategic shift, Kroger has announced the closure of three fulfillment centers located in Wisconsin, Maryland, and Florida. These closures are scheduled to take place on February 1, 2026, with the aim of improving delivery services through a more integrated and efficient system.

The closure of these facilities will result in significant job cuts, affecting a total of 468 employees. Specifically, 211 jobs will be eliminated at the Pleasant Prairie facility, 935 positions at the Groveland location, and 450 customer service delivery drivers will be laid off across the three centers.

The Groveland Customer Fulfillment Center (CFC), which opened in June 2021, the Pleasant Prairie CFC that began operations in June 2022, and the Frederick CFC launched in June 2023, will all be impacted by these closures.

Partnerships and Future Plans

Kroger's partnership with Ocado, initiated in 2018, has been a significant element of its e-commerce strategy. This collaboration is set to continue as Kroger plans to open two new CFCs in Charlotte and Phoenix during the fiscal year 2026. These new centers are expected to support the company's evolving e-commerce infrastructure and facilitate the hybrid model.

Furthermore, Kroger is set to pilot store-based automation, which is aimed at streamlining operations and enhancing customer service. This initiative aligns with the company's efforts to integrate advanced technologies into its retail operations.

E-Commerce Growth and Market Trends

Kroger's e-commerce sales increased by 16% in the second quarter, marking five consecutive quarters of double-digit growth. This trend reflects a broader shift in consumer behavior towards online shopping and underscores the importance of adapting to these changes within the retail industry.

As consumer preferences continue to evolve, Kroger's hybrid e-commerce model represents a forward-thinking approach to meeting customer needs while maintaining operational efficiency. By closing certain fulfillment centers and focusing on new technological advancements, Kroger aims to streamline its operations and continue its growth trajectory in the competitive e-commerce landscape.