US supermarket operator Kroger has announced to close three of eight logistics facilities for its online business, which are equipped with Ocado automation technology, in January 2026. Other locations are also under review. However, the company intends to maintain those in regions with high demand. In addition, the company is stepping up its collaboration with delivery services Instacart, Doordash and Uber Eats.
Kroger said that the locations in Pleasant Prairie, Wisconsin, Frederick, Maryland, and Groveland, Florida, did not meet profitability targets. Order volumes were not sufficient to deliver an acceptable return on investment given the high fixed costs. The measures should help to increase operating profit of its online business by 400 million US Dollar.
Evidently, home delivery of groceries has not developed as expected. Dedicated fulfilment centres, even if they are largely automated, can only be operated profitably, if they are utilised to capacity. Kroger will therefore focus more on picking in stores in the future. For this purpose, the company intends to make greater use of automation solutions. It is also strengthening cooperation with delivery services.
Focus on delivery services
The retailer recently announced that it intends to deploy Instacart as primary delivery services provider for its online shop and customer app in the future. Lebensmittel Zeitung reported. The company also plans to be the first retailer to offer access to Instacart’s AI shopper tool `Cart Assistant´ via its app. The chatbot helps customers plan meals, considering specific dietary habits, possible intolerances and available budgets.
Since this autumn, Kroger customers have also been able to order their groceries via marketplace Doordash. An independent driver from the on-demand delivery service picks up the goods provided by the store and delivers them to the customer. Similarly, from the beginning of 2026, consumers will be able to order their groceries from more than 2,600 of the retailer’s stores via the Uber Eats platform.
Strategy change clouds prospects for technology providers
Kroger’s decision could also send a signal to other companies and at least slow down deployment of automated fulfilment centres. According to news agency Reuters, Ocado expects a 50 million US Dollar drop in revenues for 2026. However, Kroger’s technology provider is to receive a compensation payment of 250 million US Dollars. After the closures were announced, Ocado’s share price plummeted by 17 per cent.
