UPDATE: Feb. 7, 2022: Kroger announced on Friday that it has officially rolled out its Kroger Delivery service in the Atlanta area. Shoppers within 90 miles of the company's automated customer fulfillment center (CFC) in Forest Park, Georgia, can receive orders, with fees starting at $6.95. 

To generate interest, Kroger is offering $15 off customers' first three delivery orders of $75 for a limited time. Shoppers can also utilize Kroger's Boost membership, which offers perks like free delivery and fuel savings for $59 or $99 per year.

In a statement, Gabriel Arreaga, Kroger's senior vice president and chief supply chain officer, said the company plans to extend delivery service throughout Georgia.

Dive Brief:

• Kroger has begun a soft launch of its delivery service from its 375,000-square-foot automated customer fulfillment center (CFC) located in the Atlanta area, according to a company tweet on Thursday.
• The company also announced on Thursday the opening of a 48,000-square-foot e-commerce “spoke” facility in Indianapolis that extends its Kroger Delivery service to the Hoosier State. 
• The Indianapolis facility represents an extension of Kroger’s agreement with Ocado as the grocer continues to build out its delivery network.

Dive Insight:

Kroger confirmed an online customer bulletin that said the grocer soft-launched its delivery service from the Atlanta facility on Dec. 8. The notice offered free delivery for orders of $35 or more for individuals who signed up to participate in the launch. A spokesperson for the grocer did not offer additional details on the rollout, other than to note delivery may vary by ZIP code. 

Kroger announced in July 2019 that it was building the $55-million automated CFC in Forest Park, Georgia, just south of Atlanta. It was the fourth facility Kroger announced as part of its automated fulfillment network, and at 375,000 square feet is at the larger end of the CFCs it has detailed so far in markets around the country. The grocer has opened two of these “hub” facilities in Monroe, Ohio, and Groveland, Florida. Last week, the company announced its newest CFC site in Concord, North Carolina, located just outside Charlotte.

Our Atlanta ???? customer fulfillment center is in soft launch phase and ready to test and learn! pic.twitter.com/dnrHVQqneF

— Kroger News (@KrogerNews) December 16, 2021

The company is also opening smaller cross-docking facilities, or “spoke” sites, that extend service in markets located within the same regions as CFC hubs. So far, Kroger has opened two spoke sites in Florida — one in Tampa and one in Jacksonville — that work in concert with the Groveland CFC. The Indianapolis spoke site is the first such facility announced in the same region as its Monroe CFC.

According to Thursday’s announcement, the Indianapolis spoke site, located at 9222 E. 33rd St. in the city, will deliver to 35 ZIP codes, mostly in the Indianapolis area. Richmond, Indiana, located roughly 80 miles east of Indianapolis and sitting near the state’s border with Ohio, is also included in the coverage area.

Kroger delivers to sites located within 90 miles of its CFCs and spoke sites, and will add additional service sites in step with demand. The Indianapolis facility will employ up to 150 Kroger employees and wages start at $19 an hour plus benefits.

Kroger’s vertically integrated delivery service offers variable fees as low as $6.95 for shoppers based on their loyalty status, route optimization and other factors, according to Thursday's announcement. Deliveries arrive in company-branded vans, with delivery drivers trained to answer customer questions and manage order changes.

The grocer’s evolving fulfillment network incorporates facilities across a range of sizes and levels of automation. In Florida, where Kroger doesn’t operate any stores, the company has opened its CFC and spoke sites and is also building an automated micro-fulfillment facility to deliver fast-moving goods. 

The build-out for its Ocado network is costly, with upfront costs totaling $100 million this year alone, and some analysts have questioned whether Kroger will eventually be able to recoup those costs along with ongoing fees. But the grocer maintains it is scaling a service that meets online shopping demand and will draw in loads of new customers. By the end of 2023, Kroger plans to hit more than $20 billion in online sales, doubling the sales it saw during last year’s online boom.

To help drive sales volume from its dedicated sites as well as stores across the country, Kroger recently introduced a two-tier membership program called Kroger Boost. The program offers unlimited no-fee delivery within 24 hours for a $59 annual fee, or in as little as two hours for a $99 fee. Both options require a $35 minimum order amount. The program has rolled out in the Cincinnati; Atlanta; Indianapolis; and Columbus, Ohio divisions, with additional ones set to be added in 2022.