Kroger Shifts Strategy: Closes Robotic Warehouses for Store Fulfillment

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

Kroger's decision comes as it acknowledges that its investment in robotics-focused warehouses, initiated during the pandemic, is negatively impacting its e-commerce earnings and overall financial performance.

Chairman and interim CEO Ronald Sargent stated that insufficient capital was allocated to store growth 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 developed the systems.

The company plans to open 14 new grocery stores in the fourth quarter and aims for a 30% increase in new-store builds throughout 2026. Despite these plans, Kroger expects to realize a net loss of 30 stores over 18 months as it closes 60 underperforming locations but opens 30 new ones.

GlobalData retail analyst Neil Saunders described Kroger's automated fulfillment strategy as a misadventure from the tenure of former CEO Rodney McMullen, who resigned in March following an internal investigation.

Kroger is now shifting its focus to deepen its partnerships with third-party grocery delivery services such as Instacart, DoorDash, and Uber Eats. Following the announcement, Kroger's stock price fell approximately 6%, reaching a six-month low of $63.31.