Kroger is pulling back from its high-profile partnership with Ocado, canceling plans for a new automated grocery fulfillment center in Charlotte, North Carolina, and shutting down multiple U.S. sites tied to the deal.
As part of the move, Kroger will pay Ocado a one-time fee of $350 million for its decision to scale back its use of Ocado’s robotic warehouse network in the U.S.
One of the locations affected is a spoke facility in Nashville, Tennessee, which will close permanently. The shutdown will result in 132 layoffs. Kroger has not announced any new warehouse openings tied to the automation program.
The companies first partnered in 2018 with plans to build dozens of automated customer fulfillment centers across the country. The sites were designed to power Kroger’s online grocery business using Ocado’s robotics and software. But several of those projects never moved beyond the early stages.
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Kroger is now shifting its online grocery strategy toward using its existing stores for order fulfillment. The company is also leaning more heavily on third-party delivery partners like Instacart, DoorDash, and Uber Eats to handle last-mile delivery.
The pullback marks a major change from Kroger’s earlier plan to rely on large, centralized robotic warehouses as part of its e-commerce growth. The move also represents a setback for Ocado’s push to expand its automated grocery model across the U.S.
Ocado said Kroger remains a partner, but the relationship is now smaller than initially planned. The $350 million payment helps offset the financial hit tied to canceled projects.
