Kroger is scaling back its investment in automated e-commerce warehouses and shifting more online fulfillment to stores and third-party partners as it targets $400 million in e-commerce operating profit in 2026.
The grocer said it will rely less on its customer fulfillment center (CFC) model, an Ocado-powered system introduced in 2018 that uses AI, robotics and vertical integration to speed fresh-food delivery.
After a full review, Kroger will close CFC sites in Pleasant Prairie, Wis.; Frederick, Md.; and Groveland, Fla. in January 2026, and will monitor the performance of remaining facilities.
The company expects to take $2.6 billion in impairment and related charges in its third fiscal quarter as the automated network failed to meet financial expectations.
Kroger previously closed three CFC “spoke” cross-docking sites in March 2024.
As it winds down some automated centers, Kroger is expanding its partnerships with online delivery platforms. The retailer will be among the first to offer Instacart’s AI-powered Cart Assistant within the Kroger iOS app.
The tool uses agentic AI to provide meal ideas, speed basket building, and support personalised planning.
Kroger has also deepened its collaboration with DoorDash, giving customers access to its full grocery assortment from nearly 2,700 stores, and announced an upcoming offering with Uber Eats Marketplace, making it the first retailer on the platform to let customers order groceries alongside restaurant meals.
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Kroger said these expanded delivery offerings will create additional retail media advertising opportunities for CPG brands.
“E-commerce remains a core part of serving customers who want better value, wide selection and flexible ways to shop,” said Ron Sargent, Kroger chairman and CEO.
“We are taking decisive action to make shopping easier, offer faster delivery times, provide more options to our customers, and we expect to deliver profitable sales growth as a result.”
In markets with dense demand, Kroger will continue using automated fulfillment to expand capacity and productivity, while also piloting capital-light, store-based automation in high-volume regions.
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