Kroger plans to shutter ‘Miami Spoke’ warehouse

Kroger is shutting down its Miami-area delivery warehouse in Opa-locka, Fla., which opened last year to serve delivery customers in the Southeast region of the state.

The 60,000-square-foot, cross-docking facility, dubbed the “Miami Spoke,” was built to extend the reach of the company’s automated fulfillment center in Groveland, Fla., to the Miami area, but it had been underperforming expectations, the company said.

“Kroger’s commitment to innovation means that we test and learn quickly to identify the most effective ways to deliver fresh, affordable food to our customers,” a company spokesperson told Supermarket News. “Despite our best efforts, including the support from new customers, learnings from other locations, and the incredible work of our associates, these facilities did not meet the benchmarks we set for success.”

No other automated fulfillment centers or cross-docking spoke locations are impacted by this closure, the company said, and in fact a warehouse in another area of the state is scheduled to open later this year.

“Kroger remains committed to growing its e-commerce offerings, delivering fresh food to more communities across the U.S.,” the spokesperson said.

In a memo sent to employees of the Opa-locka warehouse, the company said the Miami Spoke would permanently close on May 26. A copy of the memo was obtained by Supermarket News.

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“The Kroger Fulfillment Network is growing in other markets, and the company is offering relocation assistance for those interested in moving to a new location,” the company said in the memo.

The Opa-locka spoke facility opened in February 2023, serving as an intermediate transfer point between the company’s 375,000-square-foot, highly automated Groveland facility and individual delivery customers. The cross-docking warehouse received deliveries from the Groveland fulfillment center and loaded them onto smaller refrigerated trucks for home deliveries in the Miami area.

Kroger and its ecommerce fulfillment partner Ocado opened the state-of-the-art Groveland facility in 2021, complete with advanced robotics that seek to optimize order picking and movement of product within the facility.

In Florida, where Kroger lacks a retail presence, its delivery operations give it a foothold against regional powerhouse Publix Super Markets, as well as low-price competitors such as Walmart and fast-growing Aldi, which is expanding through its recent acquisition of 400 Winn-Dixie and Harvey’s supermarket locations in Florida and other Southeastern states.

Reports last year said Kroger was slowing its development of automated fulfillment centers with Ocado as it seeks to better understand the systems, which have been more extensively deployed in Europe. Kroger launched its partnership with U.K.-based Ocado Group in 2018 and has since opened several automated facilities around the country.

In its recent year-end conference call with analysts, Kroger said its digital sales, which include both pick-up and delivery, totaled more than $12 billion in fiscal 2023. Delivery sales, excluding an extra week in fiscal 2023, were up 24% over year-ago results.

“We improved our cost to serve through increased volume and process enhancements as well as technology to optimize associate pick routes for more efficient picking,” said Rodney McMullen, chairman and CEO, during the call. “Digital is an important growth accelerator in our business.”