Ocado and Kroger’s once‑ambitious push to automate U.S. grocery fulfillment is unraveling. On December 5, 2025 Kroger confirmed it will cancel a planned automated Customer Fulfillment Center (CFC) in Charlotte, North Carolina, and shut down a “spoke” facility in Nashville, Tennessee, effective February 2026.
The move follows earlier closures of fulfillment centers in Wisconsin, Maryland, and Florida — part of a broader retrenchment in Kroger’s e‑commerce logistics network.
Billions Invested, Returns Missing
Kroger had teamed up with Ocado back in 2018 to build what could have become a chain of up to 20 fully automated warehouses nationwide — a bold attempt to transform grocery delivery.
Instead, the reality of high capital costs, lower-than-expected volumes, and volatile order patterns undermined the economics. In connection with the latest shutdowns, Kroger agreed to pay Ocado $350 million — a substantial payout for scrapping the planned Charlotte facility and closing several existing centers.
New Direction: Stores and Delivery Partners
Rather than doubling down on centralized robotic fulfillment, Kroger is shifting toward a “hybrid e‑commerce” model. Under the new plan, stores themselves will do more of the order‑picking and fulfillment work, supported by third‑party delivery platforms such as Instacart, DoorDash, and Uber Eats.
In markets where demand remains dense, Kroger will continue operating remaining Ocado-powered facilities — such as in Ohio, Texas, Colorado, Michigan and Georgia — while exploring “store-based automation” for cost‑effective growth.
What It Means for the Industry
- The retreat underscores the challenge of scaling high-cost automation in retail supply chains when consumer demand is inconsistent.
- It signals a potential shift in the industry back toward hybrid fulfillment models — blending existing store infrastructure with digital ordering and third-party delivery.
- For automated‑fulfillment vendors like Ocado, the Kroger pull-back raises questions about the resilience of large‑scale warehouse automation in U.S. grocery markets.
The Kroger‑Ocado saga offers a cautionary tale about automation in grocery retail. As companies chase rapid delivery and efficiency, the economics — especially in lower‑density markets — may not add up.
