Kroger Plans $89M High-Tech Fulfillment Center in Phoenix

The project is among as many as 20 automated facilities planned by the nation’s largest grocery chain.

Kroger Customer Fulfillment Center. Image courtesy of The Kroger Co.

The Kroger Co. continues to make strides in the expansion of its portfolio of customer fulfillment centers with the announcement of plans for a new facility in Phoenix, where it operates as Fry’s Food Stores. The largest grocery retailer in the U.S. will make a capital investment of $89 million to realize the development of the approximately 222,900-square-foot project, according to a January 21, 2021, document from the Phoenix City Council.

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Kroger’s new facility will be located on an as-yet-to-be-identified site. As of January 20, the company was in the midst of conducting due diligence on potential locations in the city in anticipation of entering into a development agreement. The new Phoenix facility will be one of as many as 20 automated customer fulfillment centers that Kroger expects to develop as part of a corporate partnership the company established with Ocado, a U.K.-based online grocery technology platform, in 2018.

“Kroger began investing in digital several years ago to build a seamless ecosystem that would deliver anything, anytime, anywhere. As part of our journey, we have been evolving our fulfillment network,” Rodney McMullen, CEO of The Kroger Co., said during the company’s third quarter 2020 earnings conference call on December 3, 2020. “We are innovating and building out a flexible network of fulfillment options and working with key solutions providers.” Ocado is one of those key solutions providers.

Kroger’s Ocado-powered customer fulfillment center in Phoenix is on schedule to be up and running 24 months after the project breaks ground. Ultimately, the facility will create up to an estimated 700 new jobs.

The new grocery experience

Ocado is partnering exclusively with Kroger in the U.S. and will bolster the grocer’s digital robotics and technology capabilities. Together, the partners will create what Kroger describes as a “game-changing ecosystem” for Kroger shoppers across the country, effectively redefining the customer experience with stores and facilities that vary in proximity, size and design with optimal capabilities. Kroger will open its first Ocado-powered customer fulfillment center just outside Cincinnati early this year. The $55 million facility will span 335,000 square feet in Monroe, Ohio.

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