On November 20, 2018, Kroger Co said it would place the first of 20 high-tech warehouses it plans to build with UK-based Ocado Group Plc in its hometown of Cincinnati, Ohio.
The move put the largest U.S. supermarket operator deeper into the fight with Walmart Inc and Amazon.com Inc for a slice of the online grocery market, which Reuters said accounted for about 1 percent to 4 percent of the $800 billion U.S. grocery business.
Kroger had already paid roughly $248 million in May 2018 for a minority stake in Ocado and secured an exclusive arrangement for the U.S. market. The first project was set to cost Kroger $55 million and would be built in Monroe, Ohio, a suburb north of Cincinnati.
The facility, described as a 335,000-square-foot warehouse, was designed around Ocado’s automated systems. The company’s “sheds” use robot fleets to pick and pack groceries, and its newer machines can assemble a 50-item order in as little as five minutes.
Kroger said the Monroe project was expected to create 410 jobs, but the plan still depended on state and local incentives. A spokeswoman said the warehouse was scheduled to open by 2021.
The investment came as grocery chains rushed to cut the cost of home delivery. Amazon had been the leading online grocery seller before its $13.7 billion purchase of Whole Foods Market in 2017, a deal that pushed rivals to accelerate automation plans.
Kroger, Walmart and Ahold Delhaize had each partnered with technology firms to build automated order fulfillment warehouses as the sector tried to make delivery of milk, eggs and other essentials more profitable.
Reporting at the time said the project was part of a broader race to modernize grocery logistics, with Cincinnati chosen as the starting point for Kroger’s U.S. rollout.
FILE PHOTO: The Kroger supermarket chain's headquarters is shown in Cincinnati, Ohio, U.S., June 28, 2018. REUTERS/Lisa Baertlein/File Photo
