Thursday, July 18, 2024

Three e-commerce fulfillment facilities to close

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Kroger, in partnership with Ocado, is closing three spoke facilities in Opa-locka, South Florida, and San Antonio and Austin, Texas on May 25. The decision comes as a setback for the grocery giant as it aims to establish a strong home delivery service.

Kroger’s efforts to boost online sales in Florida have been challenging, given the limited presence of its stores in the state. Despite launching a customer fulfillment center in Groveland in 2021 and a spoke facility in Opa-locka in 2022, competition from established players like Publix and Walmart has been fierce.

In Texas, Kroger faces similar challenges with competition from rivals like Walmart and H-E-B. The closure of the spoke facilities in San Antonio and Austin does not affect other automated fulfillment centers operated by Kroger and Ocado.

The partnership between Kroger and Ocado began in 2018, aiming to build an automated e-commerce network across the U.S. However, as online demand has shifted due to the impact of the COVID-19 pandemic, Kroger’s e-commerce sales growth has moderated.

Despite the challenges, Kroger reported a 12% increase in full-year digital sales to billion, driven by its Boost membership and customer fulfillment centers. The company continues to prioritize existing operations and efficiency improvements in partnership with Ocado.

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