Kroger Co. announced plans to shut down three automated fulfillment centers—located in Pleasant Prairie, Wisconsin; Frederick, Maryland; and Groveland, Florida—which were built using Ocado Group technology. The company expects to record a $2.6 billion impairment charge in the current fiscal quarter related to these closures.
Kroger explained that this strategic shift aims to improve e-commerce profitability, projecting an increase of approximately $400 million in e-commerce operating profit by 2026.
The retailer plans to replace large-scale automated fulfillment with a hybrid model that leverages in-store fulfillment and third-party delivery partners, including Instacart, DoorDash, and Uber Eats. By doing so, Kroger intends to reduce operational costs while maintaining fast delivery options for online customers.
This move reflects a broader trend in retail: rethinking expensive, large-scale automation in favor of flexible, cost-efficient fulfillment models that integrate both physical store networks and third-party logistics.