Kroger to Close 3 Automated Delivery Fulfillment Sites, Losing $2.6B

Kroger said Tuesday it is closing three automated fulfillment centers in an attempt to improve its e-commerce profitability, according to a company press release. The grocery chain will incur a $2.6 billion charge related to the closures of the sites in Wisconsin, Maryland, and Florida in January. USA Today reported that the closures would result in over 1,000 layoffs.

"We are taking decisive action to make shopping easier, offer faster delivery times, provide more options to our customers, and we expect to deliver profitable sales growth as a result," Kroger Chairman and CEO Ron Sargent said in a statement.

Kroger said the cost of the closures would have no impact on its core sales, and that it would increase its e-commerce operating profit by about $400 million in 2026. Five of its automated fulfillment centers will remain open, and Kroger said it would continue to monitor their performances. Kroger partnered with British grocery technology company Ocado Group in 2018 to build these warehouses, originally committing to 20 across the U.S. The Associated Press reported that Ocado shares fell 16 percent on the London Stock Exchange Tuesday following Kroger's announcement.

According to the Associated Press, Sargent said on a call with investors in September that in most locations it made more sense to use stores for fulfillment rather than centralized warehouses to get orders to customers faster. Kroger also has partnerships with DoorDash and Instacart, and is planning on launching with Uber Eats Marketplace in early 2026.

Total Retail's Take: Kroger's move to reduce its number of fulfillment centers and shift that responsibility to stores signals that the grocer is working to satisfy customers who are demanding faster delivery. The race to divert tasks to automated centers has cooled, with more companies favoring flexible order fulfillment models where the store is at the center. Leveraging an extensive physical footprint to speed up the order delivery process is an advantage that Kroger can exploit that some of its digital-only competitors cannot.