Kroger is in the process of launching the first-of-its-kind Customer Fulfillment Center (CFC) in America. The nation’s largest grocery retailer has teamed up with Ocado Group to open the fulfillment center in Monroe, Ohio.
The Monroe CFC measures 375,000 square feet with a capacity to carry thousands of grocery products. Representing the latest model engineered for the flexible Kroger (KR) Delivery network, the CFC should allow the retailer to fulfill thousands of orders per day while supporting the fulfillment of pick-up orders as well.
The fulfillment center is the result of an exclusive partnership that Kroger inked with Ocado to introduce proprietary technology solutions in 2018. The two have leveraged machine learning, artificial intelligence, and robotics to create an efficient fulfillment picking and delivery system as part of the CFC.
According to Ocado co-founder and CEO Tim Steiner, the customer fulfillment center should make it easier for Kroger to reach customers anywhere at any time.
“In the coming years, we will open more automated CFCs across a range of sizes with Kroger. We will also roll out components of our software solutions to stores in collaboration with Kroger’s existing seamless platform to support fulfillment of curbside pickup orders,” stated Mr. Steiner.
Kroger shares are up 17% year to date after a 9.5% pop in 2020. (See Kroger stock analysis on TipRanks).
The customer fulfillment center’s unveiling comes just days after MKM Partner’s analyst William Kirk reiterated a Hold rating on Kroger. According to the analyst, Kroger’s fresh food remains the biggest differentiator and an asset that many retailers cannot replicate. The analyst has raised his stock price target to $35 from $34, implying 6% downside potential to current levels.
“Longer-term, Kroger expects to double its digital sales by 2023 while also doubling the pass-through profitability of digital offerings. The Ocado sheds will increase reach to 75% of the U.S. population (within 90 miles), and are expecting to reach profitability in year 3 and store parity in year 5,” stated Mr. Kirk.
Kroger commands a Hold consensus rating based on 2 Buys, 9 Hold, and 3 Sell ratings. The average analyst price target of $35.42 implies 4.89% downside potential to current levels.
Likewise, the stock scores 5 out of 10 on the TipRanks’ Smart Score system, suggesting it is poised to perform in line with market averages.
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