Kroger has announced the closure of three automated fulfillment centers located in Pleasant Prairie, Wisconsin; Frederick, Maryland; and Groveland, Florida, in an effort to enhance its delivery services. The grocery giant detailed in a news release that these centers will cease operations in January. As part of this strategic shift, Kroger also stated that it would closely monitor the performance of its remaining fulfillment centers, which are part of a partnership with British online supermarket and technology group Ocado.
Chairman and CEO Ron Sargent emphasized the company’s commitment to improving the shopping experience and delivery efficiency for customers. He noted that these measures are anticipated to not only simplify the shopping process but also to lead to profitable sales growth moving forward. Kroger projected that the closures will have no detrimental impact on its core sales and further expects its e-commerce operating profit to rise to approximately $400 million by 2026.
In addition to the fulfillment center closures, Kroger has been reinforcing its partnerships with various online grocery and food delivery services, including Instacart, DoorDash, and Uber Eats, as part of its broader e-commerce strategy. Sargent reaffirmed the importance of e-commerce for serving customers who seek better value.
The closures will also lead to significant job losses. A layoff notice filed in Wisconsin reveals that 211 jobs will be lost at the Pleasant Prairie facility, while the Groveland facility’s closure will result in 935 layoffs, predominantly affecting customer service delivery drivers. Furthermore, fulfillment centers linked to Groveland are also set to close, affecting an additional 468 jobs across three locations.
Currently, there is no WARN Notice posted for the Maryland facility, but it is also expected to close by February 1. The cumulative job losses tied to these closures mark a notable shift in Kroger’s labor landscape.
Kroger and Ocado have collaborated since 2018 to implement a Smart Platform designed for automated fulfillment centers. As a consequence of the closures, Ocado is projected to receive over $250 million in compensation and expects a fiscal impact of around $50 million in 2026. Kroger indicated it would recognize approximately $2.6 billion in impairment and related charges due to these closures during the third quarter of 2025.
Industry analysts have remarked on the changing dynamics of the grocery delivery market, particularly in the wake of the COVID-19 pandemic, which saw initial spikes in online grocery shopping but has since returned to pre-pandemic shopping habits. Experts suggest that collaborating with established delivery platforms is now a more viable path for companies like Kroger, compared to maintaining in-house fulfillment operations.
Both Kroger and Ocado will continue to manage the remaining five automated fulfillment centers located in Ohio, Texas, Georgia, Colorado, and Michigan. Kroger employs a total of 409,000 workers across the United States, highlighting its expansive reach in the grocery industry.
