Dive Brief:
- Kroger has opened spoke delivery facilities in Nashville, Tennessee, and Maywood, Illinois, extending the reach of its automated online grocery delivery network to two additional metropolitan areas, the grocer announced Tuesday.
- The Tennessee facility will serve as a cross-dock for orders prepared at Kroger’s robotic customer fulfillment center (CFC) in Forest Park, Georgia, while the Illinois spoke center will operate in conjunction with a CFC in Pleasant Prairie, Wisconsin.
- Kroger is bolstering its e-commerce capabilities as the company looks to reverse the decline in online sales it has seen this year even as overall revenue has increased.
Dive Insight:
The new assets join the growing number of digital order-processing facilities Kroger has been developing in partnership with U.K.-based grocery automation specialist Ocado.
Workers will transfer orders arriving by trucks at the spoke centers to vans for delivery to customers, extending the reach of the robot-powered CFCs they serve.
The spoke facility in Maywood will occupy 80,000 square feet, making it twice as large as the new delivery center in Nashville. Despite the difference in size, however, the facilities will both employ about 180 workers, according to Kroger. The grocer announced in July that it planned to build the facilities but didn’t indicate when they would open.
Kroger noted that the Maywood spoke center, which is located about 20 miles west of Chicago, will serve shoppers in an area that has long had a shortage of grocery stores. “We are happy to welcome a partner that works to address our food desert designation and look to evolving collaboration with them," Maywood Mayor Nathaniel George Booker said in a statement.
In addition to expanding Kroger’s delivery footprint, the newly opened facilities also provide an opportunity for the retailer to add shoppers to its Boost membership program — a key component of the grocer’s drive to build online engagement.
The program prompted higher delivery sales and customer retention in the four markets where it launched late last year, Kroger CEO Rodney McMullen said in June during the company’s most recent earnings call. Kroger is now working on a nationwide rollout of the program, which offers benefits including unlimited deliveries on orders of more than $35, McMullen said.
