Kroger to close some automated facilities
Grocery chain Kroger announced it will close some of its automated facilities as part of its strategy to improve the customer experience.
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Kroger announced on November 18 that it will close three automated fulfillment centers across three states in order to improve its delivery service.
The grocery giant announced in a news release that its centers in Pleasant Prairie, Wisconsin, Frederick, Maryland, and Groveland, Florida, will close in January. The company added that it would monitor the performance of the remaining centers, which it operates in conjunction with British online supermarket and technology group Ocado.
“We are taking decisive action to make shopping easier, reduce delivery times and offer more choice to our customers, and we expect to realize profitable sales growth as a result,” Kroger Chairman and CEO Ron Sargent said in a release.
Kroger does not expect the closures to impact core sales, claiming it will increase e-commerce operating income by about $400 million in 2026. The company said it is ramping up partnerships with online grocery and food delivery companies such as Instacart, DoorDash and Uber Eats as part of its efforts to rethink its e-commerce strategy.
“E-commerce remains a core part of serving customers who demand better value,” Sargent said.
The Pleasant Prairie facility will eliminate 211 jobs, according to a notice of job cuts filed in Wisconsin updated on the USA TODAY WARN Tracker.
The closure of the Groveland facility will result in the elimination of 935 jobs, according to Florida’s WARN notification page. More than 450 of the employees targeted for layoffs are classified as “customer service delivery drivers,” according to the notice.
The Jacksonville Times-Union, part of the USA TODAY network, reported that a fulfillment center connected to the Groveland facility in Florida is also scheduled to close. A warning notice for these facilities indicates that 468 jobs will be cut across the three locations.
No warning notices have been posted for the Maryland facility as of November 18th. The facility will close on February 1, according to the warning notice.
Changes in the grocery delivery market after the COVID-19 pandemic
Kroger partnered with Ocado in 2018 to deploy the company’s smart platform for automated fulfillment centres.
Ocado said it would receive more than $250 million in compensation following the closure, and said it expected an impact of around $50 million in the 2026 financial year. Kroger said it will incur approximately $2.6 billion in impairment and other related charges related to the closure in the third quarter of 2025.
In September, the company announced a “site-by-site” review of the fulfillment network it had built with Ocado, and signaled it might exit investment in automated warehouses.
“The pandemic hasn’t subsided and shoppers have quickly returned to stores, so the economics of running a dedicated e-commerce facility may no longer make sense,” eMarketer analyst Susie Davidkanian told Reuters, adding that Kroger’s partnership with online platforms has further expanded its reach to consumers. “In this environment, it’s more efficient to partner[with a delivery company]than to process[orders]ourselves.”
Ocado added that the companies will operate the remaining five locations in Ohio, Texas, Georgia, Colorado and Michigan.
Ohio-based Kroger employs 409,000 people nationwide, the Cincinnati Enquirer, part of the USA TODAY network, reported in September.
Contributed by: Reuters
