Kroger, Ocado said to proceed with Phoenix warehouse

Kroger said on Friday that it will pay automated warehouse technology provider Ocado Group $350 million in cash as the retailer closes some facilities and revamps its ecommerce strategy.

Kroger said on Friday that it will pay automated warehouse technology provider Ocado Group $350 million in cash as the retailer closes some facilities and revamps its ecommerce strategy.

In addition, reports said Kroger will cancel plans for the development of an automated warehouse in Charlotte, N.C., but will proceed with the construction of a facility in partnership with Ocado in Phoenix. That location, which had originally been scheduled to open by early this year, is now slated for a 2026 opening, according to reports. It will be the first to include Ocado’s new robotics technology developed specifically for freezer environments, the reports said.

Kroger last month announced that it had completed a review of its ecommerce operations and would shutter three automated facilities in Pleasant Prairie, Wis.; Frederick, Md; and Groveland, Fla.;, in January, and take an impairment charge totaling $2.6 billion. On Friday Kroger filed an amendment to that impairment charge highlighting the $350 million payment to Ocado.

Neither Kroger nor Ocado could be reached for further comment.

“We’re evolving our hybrid fulfillment model by using automated fulfillment in geographies where customer demand supports it and also leveraging store-based fulfillment through our pickup business and relationships with well-established thirdparty delivery partners,” said David John Kennerley, executive VP and chief financial officer for, Kroger, in the company’s Q3 call with analysts last week.
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Exclusivity of partnership in question

As previously reported, Hatfield, England-based Ocado could end its exclusive partnership with Kroger in the U.S. under certain conditions. The two companies in 2018 launched an exclusive partnership to open highly automated distribution facilities in the U.S., and at the time they identified 20 potential locations. They have since opened eight such facilities, including the three that are slated for closure.
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The exclusive agreement between the two companies could be terminated if development moves too slowly, according to reports, which would allow Ocado to work with other retailers in the U.S.

Last year, Canadian supermarket retailer Sobeys said it had canceled the planned opening of an Ocado warehouse in Vancouver and ended its exclusive technology partnership with the company.

Automated freezer technology

Frozen-food warehouses such as the one Kroger and Ocado are building in Phoenix represent a significant opportunity for automation, according to some reports.

Ocado’s automated freezer solution will automatically load empty totes into the freezer and place them in a waiting area for picking by its robots, the company explains on its website. The filled totes can then be kept frozen in a waiting area until delivery.
This will contribute to energy savings and minimize the need for workers to spend time in a challenging freezer environment, the company said.

Read the entire Current with Kroger for Period 11, 2025