The Kroger Co. has updated its e-commerce plan following its announcement to close three fulfillment facilities and expand relationships with delivery partners.
Following a comprehensive review, Kroger identified opportunities to optimize its fulfillment network by closing facilities in Pleasant Prairie, Wisconsin; Frederick, Maryland; and Groveland, Florida, in January, while monitoring the remaining facilities’ performance.
Kroger expects these updates to have a positive effect to e-commerce operating profit of about $400 million in 2026. This will be used to improve the customer experience through lower prices and better store conditions while also improving operating margins.
The company expects to incur impairment and related charges in the third fiscal quarter of 2025 of about $2.6 billion as a result of the closures and the automated fulfillment network not meeting financial expectations. The company expects these closures to have a neutral effect on its identical sales without fuel.
Kroger’s hybrid e-commerce offerings will deliver accelerated online growth, using its growing store footprint, third-party delivery providers and automated fulfillment facilities where applicable.
“E-commerce remains a core part of serving customers who want better value, wide selection and flexible ways to shop,” said Ron Sargent, Kroger’s chairman and CEO.
“We are building on a strong foundation with five consecutive quarters of double-digit e-commerce sales growth and increased profitability improvements. 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.”
Kroger expanded its Instacart relationship as its primary delivery fulfillment provider across its website and app. The companies recently announced Kroger will be one of the first retailers to offer customers access to Instacart’s AI assistant, Cart Assistant, on Kroger’s iOS mobile app. To reach more customers, Kroger also broadened its relationship with DoorDash, giving tens of millions of customers access to food and grocery essentials on-demand through the DoorDash Marketplace.
In addition, Kroger announced the upcoming launch of a new customer experience on Uber Eats Marketplace in early 2026 to fulfill more customers’ shopping needs by providing access to groceries when customers order meals from their favorite local restaurants as well as offering standard grocery delivery.
Increased customer traffic and trips through these third-party providers also will fuel Kroger’s retail media business growth through first of its kind capabilities, creating new opportunities for CPGs to reach and engage customers with relevant advertising.
“Every customer is different, and they expect more options to access fresh, affordable food without compromising on the value or convenience,” said Yael Cosset, EVP and chief digital officer for Kroger.
“Our differentiated approach, combining the proximity of our stores with high-capacity automation, the wide assortment of the fresh food they love, allows us to fulfill more trips for the families we serve. Being able to deliver food and groceries to tens of millions of families who shop with us every year, in as little as 30 minutes, is a winning model for Kroger and our customers.”
In geographies where Kroger sees higher density of demand, the company will take advantage of automated customer fulfillment to increase customer engagement, capacity and improve productivity and profitability.
As part of its hybrid fulfillment network, Kroger also will pilot capital-light, store-based automation in high-volume geographies to improve fulfillment capabilities and elevate the in-store customer experience. The adjustments to the network combined with increased store-based fulfillment will contribute to ROIC improvement.
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