Kroger building distribution center in DC metro area despite no physical stores nearby

Grocery chain is partnering with robotic warehouse tech company Ocado

Kroger has reportedly made headway in the distribution center it is building in Frederick, Maryland, for its grocery delivery expansion, a Friday report from WTOP said.

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The center will be 350,000 square feet and powered by Ocado Solutions – a British automated warehouse technology company that specializes in online order fulfillment. This partnership between Kroger and Ocado will provide online grocery delivery services to residents throughout the Baltimore, Philadelphia and Washington, D.C. metro area despite not having any physical Kroger branded stores in the area.

WTOP reported that Kroger has no intentions of opening stores in these locations.

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FOX Business reached out to Kroger for comment on its Frederick-based distribution center plans but did not immediately hear back at the time of publication.

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Kroger's distribution center initiative in Maryland is more than six months in the making, according to a January press release.

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"Kroger is incredibly excited to construct one of our industry-leading Customer Fulfillment Centers in Maryland in relationship with Ocado to bring fresh food to our customers faster than ever before," said Kroger's Senior Vice President Of Supply Chain, Manufacturing And Sourcing Robert Clark in a previous statement. "Through our strategic partnership, we are engineering a model for the region, leveraging advanced robotics technology and creative solutions to redefine the customer experience."

Kroger and Ocado's new customer fulfillment center – an automated warehouse facility with digital and robotic capabilities, also known as a "shed." (PRNewsfoto/The Kroger Co.)

Four hundred new jobs will immediately be created in Frederick upon the facility's completion, along with up to 100 more added at a later date as the center expands, Kroger's release said at the time.

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Online grocery delivery service has grown exponentially in recent months due to the coronavirus pandemic and shelter-in-place orders.

More than three-quarter – 78.7 percent – of American consumers have shopped for groceries online at some point throughout the pandemic, a report from commercial data analytics company Inmar Intelligence said in May. Additionally, 56.7 percent of respondents told the firm they were shopping for groceries online more often than they did before the pandemic.

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Grocery companies like Kroger have taken notice of the consumer shift and are evolving their business models to include online orders.

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Multibillion-dollar retailers such as Walmart and Amazon are competing to build up each company's respective grocery delivery service – both of which can ship a customer's cart in up to two hours. It is not clear at this time whether Kroger will try to employ a similar service with its autonomous distribution centers.

"We see Ocado as an innovative, exciting and transformative partnership in pursuit of our Restock Kroger vision, to serve America through food inspiration and uplift," Kroger's President and CEO Rodney McMullen said about the grocery chain's high-tech partnership. "We are actively creating a seamless digital experience for our customers. Our partnership with Ocado will speed up our efforts to redefine the food and grocery."

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