Kroger to Close Some Automated Sites, Expand Deals With Instacart, DoorDash, Uber Eats

The move will result in nearly $2.6 billion in third-quarter charges.

A Kroger store in Novi, Michigan. Ed Pevos/Ann Arbor News via AP

The Kroger Co., one of the United States’ largest grocery chains, announced on Nov. 18 that it plans to close several of its automated fulfillment centers, a move that will result in nearly $2.6 billion in third-quarter charges. The company is also expanding its partnerships with Instacart, DoorDash, and Uber Eats.

The Cincinnati-based retail giant indicated the changes are necessary to improve the customer experience by offering lower prices and better store conditions, as well as to advance its operating margins. The company forecasts the new initiatives will boost e-commerce by about $400 million in 2026 and maintains that the fulfillment-center closures will have a neutral effect on sales.

The company’s e-commerce business has yet to turn a profit.

“We are seeing improvements in profitability at an increasing rate. But to be clear on the profitability, we’re not profitable at this point, and we must become profitable in our e-commerce business,” Ron Sargent, Kroger’s chairman and interim CEO, said during an earnings call in June.

He also discussed plans to close nearly 60 stores over the next 18 months.

The centers targeted for initial closing are those in Pleasant Prairie, Wisconsin; Frederick, Maryland; and Groveland, Florida. Closures are expected to begin in January. The company will also continue to monitor the performance of its remaining facilities.

In the Nov. 18 announcement, Sargent emphasized that the e-commerce division requires extra attention, and it “remains a core part of serving customers who want better value, wide selection and flexible ways to shop.”

The goal, he said, is to make shopping easier, offer faster delivery times, and improve the bottom line.

Kroger will now be one of the first retailers to offer consumer access to Instacart’s artificial intelligence assistant on the Kroger iOS mobile app. In addition, the mega grocer is strengthening its relationship with DoorDash, which will provide millions of consumers with access to food and grocery items on demand through the DoorDash Marketplace.

The company also plans to launch a new customer experience on Uber Eats Marketplace early next year. Consumers will soon be able to order standard grocery deliveries from the app, in addition to meals from local restaurants.

Kroger’s decision to shut down some locations, ending its own home delivery service in certain areas of the country, received mixed reactions on social media.

One X user was “stunned” by the news.

“Their model was to have no physical stores in Florida and move everything to delivery. We’re 10 minutes from their main distribution hub in Groveland, so if they can’t make a go of it from there, it doesn’t look good for the rest of the state,” the post reads.

“They’re closing select fulfillment centers,” a Reddit user said. “It’s a business decision, they’re closing some in Wisconsin as well. I don’t think it’s necessarily a bad look, just an assessment on how business is doing.”

In regions with higher demand density, Kroger said it will continue using automated customer-fulfillment operations to boost customer engagement and improve productivity and profitability. The company also plans to operate capital-light, store-based automation in high-volume areas to upgrade the in-store customer experience.

Founded in 1883 by Barney Kroger, the company currently operates in 35 states and is most prevalent in the South, Midwest, and West. California, Texas, and Ohio have the most Kroger locations. The company employs more than 400,000 people, serving more than 11 million customers a day through its retail stores and eCommerce shopping.

Some of its locations operate under banner names such as Fry’s, City Market, Bakers, Mariano’s, Food4Less, and Metro Market.

Kroger’s stock price rose by 1.94 percent on Nov. 18, closing at $67.38. Meanwhile, shares of Ocado, the British robotics company that provides Kroger with automation technology, tumbled by 21.81 percent.