Online Kroger Expands Into New Markets Without Building Stores

CINCINNATI, Ohio – (By Dale King, Realty News Report) – Delivering commodities from market to consumer isn’t a new concept. Barney Kroger did it more than a century ago after spending his life savings of $372 to open a grocery store in 1883 in downtown Cincinnati – a single outlet bearing his surname.

While Barney harnessed his horse, Dan, to a wagon to carry grocery items to customers around Greater Cincinnati, the Kroger supermarket mega-chain today is hooking up with specialized technology partners to transport food, fresh produce and other household necessities using robotics, computer systems, algorithms and high-flying drone know-how to do the job, even in areas far from the nearest brick-and-mortar Kroger store.

It’s taken the better part of a decade to pull together a techno-team with the savvy necessary to assemble cyber warehouses (called customer fulfillment centers or CFCs) where humans and robots mingle with a common cause – to pack and distribute edibles to hungry folks for miles around.

In addition to more than 2,700 walk-in stores, Kroger currently operates technology-driven CFCs in Monroe, Ohio, Groveland, Fla., Forest Park, Ga. (Atlanta) and Dallas, with centers slated for California, Frederick, Md., Phoenix, Romulus, Mich. (Detroit), Cleveland, Charlotte, N.C and New York, New Jersey and Connecticut in the Northeast.

With its delivery-only service, Kroger is making a return to San Antonio where it closed its 15 stores in the 1900s, leaving the Alamo City to H-E-B, a major Texas-based grocer.

Kroger taps high-tech to deliver the goods to customers it never reached

In July 2022, The Kroger Co. — consideredAmerica’s largest grocery retailer by revenue — opened its newest customer fulfillment center in Dallas. The facility is populated by human beings and automated ‘bots,’ working together to fill bins with food ordered via computer and prepare them for shipping by refrigerated trucks to consumers miles away.

Smaller, intermediate facilities called “spokes” function as halfway centers to extend delivery mileage.

A news release from Kroger says the 350,000 SF customer fulfillment center in Dallas has brought more than 500 new jobs to the Big D and surrounding communities. That massive, high-tech center works in conjunction with the smaller “spoke” operations in Austin, San Antonio and Oklahoma City. Each ‘spoke’ serves as a “last-mile” distributor enabling the Kroger delivery trucks to reach more customers.

Kroger has no traditional, physical supermarkets in Austin, San Antonio or Oklahoma City.

Another region bereft of brick-and-mortar stores bearing a Kroger logo is South Florida, a massive population area where a major chunk of Floridians resides in the three largest of the Sunshine State’s 69 counties – Miami-Dade, Broward and Palm Beach.

In June 2022, the multi-market giant put out a news release saying: “Propelled by steady growth, The Kroger Co. announces Kroger Delivery now serves customers in South Florida with the opening of a new ‘spoke’ location in Miami. The 60,000-SF facility, in collaboration with the fulfillment center in Groveland [near Orlando] will serve as a last-mile, cross-dock location that efficiently expands Kroger Delivery’s ability to serve more customers.”

“The 60,000-SF high-tech distribution center will bring 200 new jobs to Opa Locka and adjacent communities,” said James Kohnstamm, executive vice president of the Miami-Dade Beacon Council.

“This state-of-the-art facility is another example of how two of our key industries – trade and planning, and technology – intersect to deliver, innovative, seamless solutions that support business growth. The strength of our ecosystem coupled with the infrastructure to support the needs of on-demand grocery delivery make Miami-Dade a natural fit for Kroger’s expanding ecommerce delivery service.”

To announce the arrival of its Kroger.com online ordering process, the store chain has erected a multitude of billboards, particularly along I-95 which snakes through South Florida’s tri-county area, and is advertising heavily on Sunny 107.9, the powerhouse FM music station in West Palm Beach.

The key to Kroger’s cyber-expansion has virtually everything to do with a high-tech grocery ecommerce platform developed by Ocado, based in the U.K.

In 2018, Kroger and Ocado inked a collaboration plan to establish a delivery network that combines artificial intelligence, advanced robotics and automation in a bold new way, bringing first-of-its-kind technology to America. Through the hub-and-spoke delivery network, the organization now serves customers in Central Florida, Tampa and Jacksonville – a service system that kicked off in 2021 — and now in South Florida. It is all done, Kroger boasts in its news release, “without traditional brick-and-mortar stores.”

The delivery network relies on highly automated fulfillment centers. At the hub sites, more than 1,000 “bots” whizz around giant 3D grids, orchestrated by proprietary air-traffic control systems.

The grid, known as The Hive, contains totes with products and ready-to-deliver customer orders. As customers’ orders near delivery times, the bots retrieve products from The Hive and present them at pick stations for items to be sorted for delivery, a process governed by algorithms that ensure the items are intelligently packed. For example, fragile items are placed on top, bags are evenly weighted, and each order is optimized to fit into the lowest number of bags, reducing plastic use.

After being packed, groceries are loaded into refrigerated delivery vans which can store up to 20 orders. Powerful machine learning algorithms optimize delivery routes, considering factors like road conditions and optimal fuel efficiency. Drivers may travel up to 90 miles with orders from facilities to make deliveries.

Locals normally offer warm greetings to the arrival of Kroger and its computer-driven purchasing and delivery systems.

“Kroger’s choice to establish a new Customer Fulfillment Center in Dallas is a testament to the state’s exceptional business-climate and highly skilled workforce,” said Texas Governor Greg Abbott. “This new center is great news for the people of North Texas, offering the local community greater access to fresh, nutritious foods and bringing good-paying jobs and economic opportunities to hardworking Texans in the area.”

The company collaborated with the city of Dallas, the Governor’s Office of Economic Development and Tourism, local and regional workforce solutions offices and school districts for talent acquisition and development.

Welcoming the Kroger network to South Florida was Miami-Dade County Mayor Daniella Levine Cava, who said: “Kroger’s new hub in Miami-Dade County is an innovative program that demonstrates how business leaders are leveraging technology to provide important services and job opportunities.”

“We’re thrilled to introduce customers to Kroger Delivery in South Florida,” said Andrea Colby, ecommerce corporate affairs and communications manager. “We offer customers a more convenient option to access fresh food and grocery items. Kroger Delivery is an easy, seamless way to order groceries, have them arrive in refrigerated vans, delivered to your door by professional, uniformed associates all based on your demanding schedule.”

And as consumers demand more efficiency, the old ways of getting groceries fade.

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