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Kroger to enter Oklahoma via Ocado e-commerce ‘spoke’

Oklahoma City facility to extend retailer’s reach into second state where it lacks stores

The Kroger Co. is expanding its market area to a 36th state, Oklahoma, through plans to build an Ocado-automated “spoke” fulfillment facility to help fill online orders.

Cincinnati-based Kroger said Thursday that the 50,000-square-foot spoke site, at 8801 North I-35 Service Rd. in Oklahoma City, is slated to go into operation later this year. The facility will support a 350,000-square-foot, Ocado-driven customer fulfillment center (CFC) under construction in Dallas at the corner of 4200 Cleveland Rd. and 4241 Telephone Rd., which is expected to begin operations this spring.

The Oklahoma City spoke will employ up to 191 full-time associates and serve as a last-mile, cross-docking location, extending the reach of Kroger Delivery service from the Dallas “hub” CFC to customers up to 200 miles away, according to Kroger.

“We're excited to extend the Kroger fulfillment network to Oklahoma City, a new geography for our operation and an integral part of our strategy to achieve the doubling of our digital sales and profitability rate by the end of 2023,” Gabriel Arreaga, senior vice president and chief supply chain officer at Kroger, said in a statement. “This grocery delivery service is an innovative addition to the expanding digital shopping experience available to our customers. The spoke facility will provide unmatched, impeccable customer service and improve direct access to fresh food in areas eager for the variety and value offered by Kroger.”

The Oklahoma City facility will be Kroger’s fifth spoke site. Last month, the supermarket giant said it plans to open a 50,000-square-foot spoke in Louisville, Ky., later this year, which followed the December launch of a 48,000-square-foot spoke location in Indianapolis. Both spokes support a 375,000-square-foot CFC in Monroe, Ohio, which opened in April and was Kroger’s first Ocado facility to go live.

Kroger also has launched spoke facilities in Tampa and Jacksonville, Fla., which work with a 375,000-square-foot CFC in Groveland, Fla., that went into operation in June and marked the retailer’s entry into Florida, another state where it doesn’t have physical stores.

Last week, Kroger officially opened an Ocado CFC in Forest Park, Ga., that serves the Atlanta market. The 375,000-square-foot facility underwent a soft launch in December.

“We continue to be pleased with the rollout of our customer fulfillment centers in Groveland, Fla., and Monroe, Ohio, which are both exceeding internal expectations, and our most recent facility opening in Forest Park, Ga.,” Arreaga added. “We’ve experienced incredible Net Promoter Scores, and our customers tell us they love our friendly, professionally trained drivers and their refrigerated delivery vans that bring the freshest food directly to their doorsteps. We’re eager to continue expanding our fulfillment network and entering into both existing and new geographies through hub and spoke facilities.”

So far, Kroger has announced 16 CFCs, with three — Monroe, Groveland and Forest Park — now fully operational. In December, Kroger said it aims to construct a 200,000-square-foot CFC in North Carolina, expected to launch within 24 months after ground-breaking on the site. The other Ocado CFCs reported by Kroger run from 135,000 to 375,000 square feet and include locations in Frederick, Md.; Phoenix; Pleasant Prairie, Wis.; and Romulus, Mich., as well as unspecified sites in the Pacific Northwest, West and Northeast, the latter representing another location where Kroger lacks stores. The retailer also has announced plans for two CFCs in Southern California and two more in Florida.

Currently, Kroger has 2,726 brick-and-mortar stores in 34 states under banners including Kroger, Ralphs, Dillons, Smith’s, King Soopers, Fry’s, QFC, City Market, Owen’s, Jay C, Pay Less, Baker’s, Gerbes, Harris Teeter, Pick ‘n Save, Metro Market, Mariano’s, Fred Meyer, Food 4 Less and Foods Co. Florida represents the only state where the retailer now operates but doesn’t have physical stores.

Kroger unveiled its partnership with United Kingdom-based Ocado Group in May 2018, at which time the companies said they planned 20 CFCs in the United States over the ensuing three years. The Ocado CFCs and supporting facilities use vertical integration, machine learning and robotics to service online grocery orders and are expected to expand Kroger’s reach to a larger geographic footprint, including in areas where it doesn’t operate brick-and-mortar stores.

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