Kroger has opened its 350,000 square foot automated customer fulfillment center (CFC) in Frederick, MD. The facility, a former Toys “R” Us depot located on Geoffrey Way, was first announced in 2019 and is part of the nation’s largest pure-play grocer’s partnership with British online grocer Ocado to build CFCs that would serve only the chain’s online shoppers. About 400 new jobs will ultimately be created with the opening of the new warehouse.
The Frederick fulfillment center initially opened in February 2023 in “test phase mode” before going fully “live” about a month later. It is the 17th Ocado-driven depot (including “spoke” locations) to open in the last two years (Monroe, OH was the first). The online-driven warehouses range from 135,000 square feet to 375,000 square feet with some locations based in areas where Kroger also operates brick and mortar stores (Dallas) as well as markets where the large chain does not operate supermarkets (Groveland, FL).
The closest Kroger store to the Frederick CFC is located in Mechanicsville, VA (about 140 miles away), however, Kroger’s sister retailer – Harris Teeter – operates about 55 stores in the Baltimore-Washington area and its online customers can also utilize the services of the Frederick depot.
The Frederick CFC will serve online customers in an area that is ultimately expected to cover a 90-mile radius which would encompass parts of Maryland, Pennsylvania, Virginia, West Virginia and Washington, DC.
The fulfillment center includes fresh, shelf-stable and household products to fulfill customers’ orders. Once the orders are assembled, associates provide quality checks to ensure the correct items have been chosen, before the orders are packed, using the fewest number of bags to reduce waste. Products move from a climate-controlled fulfillment center directly into customized refrigerated vans.
Late last month, Ocado CEO Tim Steiner said both companies are committed to building more CFCs despite a deceleration of new facilities from what was projected when the partnership was announced in 2018.
“They (Kroger) are committed to building more, they just want to make those (existing) ones work as well as they can before they roll out loads -a very sensible thing to do,” the 53-year old chief executive told Reuters. “They expect to have loads of these warehouses. But when you do something new, you need to make it work really well before you scale it up massively.”
Last month, during Kroger’s Q4 analysts’ call, CFO Gary Millerchip said that his company was still trying to fully understand the scale of demand, online customer behavior and optimization of the business model. Also on that call, Kroger CEO Rodney McMullen acknowledged that identifying specific locations for future CFCs has been a little bit more difficult that what they would have expected.
Still on the future development grid are Kroger/Ocado automated CFCs to be built in or around Charlotte, Cleveland, Southern California (two CFCs, specific locations not yet disclosed), two more in Florida (specific locations not yet disclosed), the Pacific Northwest (specific location not yet disclosed), Phoenix and the Northeast (specific location not yet disclosed).
