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Kroger (KR) to Set Up Advanced Fulfillment Center in Pheonix

Renowned grocery retailer — The Kroger Co. KR — is strengthening its operational capabilities to enhance customers’ online shopping experience. Progressing on these lines, the company, in partnership with Ocado, will set up a new Customer Fulfillment Center (“CFC”) in Phoenix, AZ. This automated warehouse facility will help strengthen the company’s distribution and delivery systems in the region.

More regarding the Phoenix CFC

Kroger is dedicated toward developing a seamless digital ecosystem, whereby it can provide value-added customer-centric solutions. The new 200,000-square-foot CFC in Phoenix will be equipped with advanced digital and robotic capabilities.

Management highlights that the new CFC site, powered by Ocado's advanced proprietary technologies, will play an important role in enhancing customer’s online shopping experience. The facility is expected to optimize fulfillment in stores for curbside pickups in Arizona. The fulfillment center is part of the company’s efforts to develop a flexible distribution network, which strategically combines consumer demand along with proximity to stores and facilities.

The CFC is expected to become operational in 24 months after the site breaks ground. The facility is expected to create approximately 700 jobs within the first five years of operation, in areas like transportation, warehousing, robotics and technology.

Efforts to Strengthen Online Shopping

Consumers’ growing inclination toward digital transactions has led several retailers to concentrate on expanding online shopping capabilities. In fact, online grocery shopping reached a whole new high amid the coronavirus pandemic, as individuals were constrained with social distancing norms. Kroger has been proactively boosting its omni-channel capabilities and other digital offering to efficiently meet consumer needs in a rapidly evolving retail ecosystem. Such endeavors help maintain the company’s dominant position among the nation’s largest grocery retailers.

Speaking of digital endeavors, Kroger has been focusing on expanding its pick up in store facilities for online orders alongside providing contact-free payment solutions like Scan, Bag and Go and Kroger Pay. It also provides digital coupons and smart shopping lists to attract greater online traffic. It also started accepting Supplemental Nutrition Assistance Program (SNAP) benefits for pickup orders. The company also makes use of Nuro’s fully autonomous, driverless vehicles for grocery delivery services. Apart from this, Kroger’s partnerships with Blackhawk Network, Mirakl and Alibaba have helped expand and add more features to its online business. Other retailers, who have been focusing heavily on boosting omni-channel capabilities, include Target Corporation TGT, Walmart Inc. WMT and Best Buy Co., Inc. BBY.

Kroger’s focus on building its digital business, alongside efforts to boost product offerings and efficient customer engagement strategies places it well for growth. A glimpse of this Zacks Rank #3 (Hold) company’s price performance reveals that it has increased 18.4% in a year compared with the industry’s 25% rally.

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