Kroger has agreed to a one-time cash payment to Ocado Group as the retailer makes changes to its fulfillment network that impact the U.K.-based technology company.
Although Kroger and Ocado will continue to partner on fulfillment processes, the capacity at which they do so is shifting. The updates can be seen in changes that Kroger has been making to its fulfillment options in the past few months. The grocer announced in mid-November that it would update its ecommerce plan to expand Kroger’s relationship with Instacart, DoorDash and Uber Eats.
The companies initially began working together in 2018 to grow Kroger’s ecommerce business by upgrading its fulfillment capabilities. In a statement, Ocado said it continues to work with Kroger across five customer fulfillment centers (CFCs) in the United States.
“We continue to invest significant resources to support our partners at Kroger, and to help them build on our longstanding partnership,” said Ocado Group CEO Tim Steiner, in a released statement. “Ocado’s technology has evolved significantly to include both the new technologies that Kroger is currently deploying in its CFC network, as well as new fulfilment products that bring Ocado’s technology to a wider range of applications, including Store Based Automation to support ‘pick up’ and immediacy.”
Kroger ranks No. 6 in Digital Commerce 360’s Top 2000 Database. The database ranks North America’s largest online retailers by their annual ecommerce sales. Furthermore, Kroger is No. 1 in the database’s Food & Beverage category, though it competes with Mass Merchants — Walmart and Target — that rank higher in the Top 2000 for online grocery sales.
Kroger, Ocado maintain fulfillment partnership
Because of changes to Kroger’s fulfillment processes that affect Ocado, Kroger has agreed to pay Ocado Group $350 million.
Kroger’s decisions to optimize its CFCs resulted in closing three locations to which Ocado would have provided services. Additionally, Kroger decided not to proceed with opening a CFC facility in Charlotte, North Carolina. The facility would have been one of two that the companies expected to begin operations in 2026.
Ocado and Kroger continue to work together at CFCs in:
- Atlanta, Georgia
- Dallas, Texas
- Denver, Colorado
- Detroit, Michigan
- Monroe, Ohio
Ocado said its teams “remain well-embedded within this network of CFCs, supporting significant progress in operational efficiency, volume growth and increasing same-day availability. That results in “a significant improvement in financial performance,” it said without qualifying the increase.
Ocado said it has expanded its capacity at the Detroit site. It also plans to deploy what it calls “AutoFreezer” technology in Kroger’s next CFC in Phoenix, Arizona. It said in a January 2025 company blog post that it designed the technology “to automate the management of inventory in the freezer, while also supporting colleagues by reducing the most unpleasant warehouse activities.”
“The product will automatically load empty totes into the freezer and place them in a waiting area for picking by our robots,” Ocado wrote. “These same totes will then be re-loaded into a chill area once full to be kept cool until delivery.”
Steiner said in his statement that Ocado’s partners “have already deployed a wide range of these fulfilment technologies to great effect.” The technologies enable Ocado’s partners to address a spectrum of geographies, population densities and online shopping missions, he said.
Do you rank in our databases?
Submit your data and we’ll see where you fit in our next ranking update.
Sign up
Stay on top of the latest developments in the online retail industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, X (formerly Twitter), Facebook and YouTube. Be the first to know when Digital Commerce 360 publishes news content.
Favorite