Kroger closing automated fulfillment centers as it tries to make delivery faster and cheaper

Core Viewpoint - Kroger is closing three automated fulfillment centers to enhance delivery operations and profitability, while monitoring the performance of its remaining facilities [1][3]. Group 1: Operational Changes - The closures will take place in Pleasant Prairie, Wisconsin; Frederick, Maryland; and Groveland, Florida, starting in January [1]. - Kroger expects to incur a $2.6 billion charge in its fiscal third quarter due to these closures [3]. - The company anticipates that these changes will improve its e-commerce operating profit by $400 million by 2026 [3]. Group 2: Strategic Partnerships - Kroger has been collaborating with Ocado Group since 2018 to develop automated warehouses, but only eight out of the planned twenty have been constructed [2]. - The company is expanding partnerships with third-party providers, including DoorDash, Uber Eats, and Instacart, to enhance delivery options [5][6]. Group 3: Delivery Strategy - Kroger's CEO stated that utilizing stores for fulfilling delivery orders is more efficient than centralized warehouses, as stores are closer to customers [4]. - The company claims it can deliver orders in less than two hours from 97% of its 2,700 U.S. stores [4]. - In high-density areas with strong delivery demand, automated fulfillment facilities are showing better results [5].