Kroger Shifts Strategy: Closes Robotic Warehouses for Store Fulfillment

The Kroger Company is closing three of its eight robotics-powered e-commerce fulfillment centers located in Groveland, Florida, Pleasant Prairie, Wisconsin, and Frederick, Maryland. The grocery chain will also scrap plans for a new fulfillment center in Charlotte but will proceed with a previously planned center in Phoenix.

Kroger's shift comes as the company acknowledges that its investment in robotic warehouses has negatively impacted its e-commerce earnings and overall profitability. Chairman and interim CEO Ronald Sargent stated on an earnings call that insufficient capital was allocated to growing stores due to heavy investments in fulfillment centers.

Kroger anticipates a write-down of approximately $2.6 billion in 2026 due to these closures, including a one-time payment of $350 million to UK-based robotics company Ocado, which built the robotic systems.

The company plans to open 14 new grocery stores in the fourth quarter and increase new-store builds by 30% in 2026, despite a net loss of 30 stores over 18 months from the closure of 60 underperforming locations.

Retail analyst Neil Saunders described Kroger's automated fulfillment centers as a misadventure from former CEO Rodney McMullen, who resigned in March. While the automated warehouses reduced costs for packing groceries, Kroger struggled to deliver at a scale that could offset the increased shipping costs.

Moving forward, Kroger will strengthen its partnerships with third-party delivery services like Instacart, DoorDash, and Uber Eats. Following the announcement, Kroger's stock price fell about 6%, reaching a six-month low of $63.31 in midday trading on Friday.