Kroger, the popular grocery chain, has announced the closure of three cross-docking spoke facilities in its Texas and Florida e-commerce operations. The affected facilities, located in Austin, San Antonio, and Miami, are set to cease operations at the end of May. Despite efforts to make these facilities successful, Kroger stated that they did not meet the company's benchmarks for success.
All impacted associates have been offered alternative opportunities within the company, according to a Kroger spokesperson. The closure of these spoke facilities does not signal a retreat from e-commerce for Kroger, as the company remains committed to expanding its online offerings and delivering fresh food to more communities across the United States.
The spoke facilities were part of Kroger's partnership with British online retailer Ocado, which utilizes larger automated facilities to assemble orders. These orders are then shipped to the cross-docking spokes and loaded onto smaller delivery trucks for distribution.
While the Austin and San Antonio facilities received orders from a larger automated shed in Dallas, the Miami spoke was served by a regional shed in Groveland, Florida. Both the Dallas and Groveland facilities will continue to operate despite the closure of the spoke facilities.
Kroger's decision to shutter these facilities comes amidst a competitive landscape in e-commerce, which has intensified during the pandemic. The company's earnings for 2023 stood at $2.96 per share, with total sales reaching $150 billion. Kroger has also been in the spotlight for a potential merger with Albertsons, a deal worth $24.6 billion. However, legal challenges have cast doubt on the likelihood of the merger being completed in the near future.
