Kroger Co (KR): New $95 Million Customer Fulfillment Center And Supply Chain Head

By Amit Chowdhry ● September 30, 2020
  • This week, Kroger announced a new $95 million customer fulfillment center and a new supply chain executive

This week, Kroger Co (NYSE: KR) made a couple of major announcements. These announcements include a new customer fulfillment center and a new senior vice president of supply chain.

Kroger and Ocado Partnering On Customer Fulfillment Center In Romulus, Michigan

Kroger announced it was partnering with Ocado (LSE: OCDO) — a world leader in technology for grocery ecommerce — in selecting Romulus, Michigan, as the latest location for a Customer Fulfillment Center (CFC). This location confirms a previous announcement stating Kroger and Ocado would construct a CFC in the Great Lakes Region.

Kroger partnered with Ocado to accelerate its ability to provide customers with anything, anytime, anywhere. The CFC model – which is an automated warehouse facility with digital and robotic capabilities – will be used to serve customers across the region. And Kroger is designing a flexible distribution network, combining disaggregated demand and the proximity of its stores and facilities that vary in design and size.

This new 135,000-square-foot CFC will accelerate Kroger’s ability to expand its products to a larger footprint. And the facility will create 250 new jobs, benefitting the City of Romulus/Aerotropolis region.

The CFC is expected to become operational 18 months after the site breaks ground and will support customers in several markets, including Michigan, Northern Ohio, and Indiana.

New Supply Chain Head

Kroger senior vice president of supply chain Robert Clark is retiring from the company after 35 years of service, effective February 1, 2021. And Clark will be succeeded by Gabriel Arreaga.

Clark started his career in the Fry’s division as a bagger in 1985. And he advanced to occupy several store, district and division leadership roles for Fry’s, including being named vice president of merchandising in 2002. Clark had relocated in 2010 to the Columbus division to serve as VP of operations and then he moved to the Fred Meyer division in 2011 to serve as vice president of merchandising. Then he relocated to Kroger’s corporate headquarters in Cincinnati in 2013 to take on the role of group vice president of non-perishables. From there, he was promoted to senior vice president of merchandising in 2016 and to his current position in 2019.

As SVP of supply chain, Arreaga will be responsible for the company’s industry-leading supply chain organization — which includes logistics, inventory and replenishment.

Arreaga is joining Kroger with deep supply chain leadership experience. For example, he served as SVP of supply chain for Mondelez International. At that company, he led a team of more than 14,000 employees within a network of 41 internal and external factories, 49 fulfillment centers, direct-to-store branches, logistics and product development. And he also served as global vice president of operations for Stanley Black and Decker and held numerous leadership roles at Unilever, including vice president of food and beverage operations.

Key Quotes About New Fulfillment Center

“Kroger is incredibly excited to develop one of our industry-leading Customer Fulfillment Centers in Michigan in relationship with Ocado to bring fresh food to our customers faster than ever before. We continue to invest in and constantly improve our e-commerce capabilities, focusing on cost-effective solutions. Our partnership with Ocado is an essential part of our evolving seamless ecosystem. In Michigan, we are engineering a smaller model for the region, leveraging advanced robotics technology and creative solutions to redefine the customer experience and respond to the growing demand for grocery e-commerce services.”

— Robert Clark, Kroger’s senior vice president of supply chain, manufacturing and sourcing

“Grocery ecommerce has reached an inflection point in 2020, and with Kroger we are developing a game-changing ecosystem for serving online grocery across the United States. Powered by Ocado’s state of the art technology, this site illustrates the unique flexibility of Ocado’s technology, as we are able to deploy sites of different sizes in different regions, to maximize penetration across diverse markets. Ocado’s proven technology will allow Kroger to achieve the lowest cost-to-serve in the market, combined with the best freshness, accuracy and service.”

— Luke Jensen, CEO of Ocado Solutions

“Kroger’s decision to invest $95 million and create 250 new jobs in Romulus further demonstrates that Wayne County is a global leader in logistics and fulfillment industries. Kroger’s continued commitment to our region with the innovative new grocery delivery service provided by this high-tech facility will help improve access to fresh foods in southeast Michigan at a time when this service is more important than ever to keep residents safe and healthy.”

— Warren Evans, Wayne County Chief Executive.

Key Quotes About Supply Chain Executive Changes

“We thank Robert for his 35 years of dedicated service and leadership. He’s been an instrumental leader at all levels of our organization and has built collaborative teams and developed business strategies that have advanced our operations and uplifted our associates and customers.”

“Gabriel’s proven history of outstanding leadership and management of complex supply chain and logistics functions will accelerate our ability to provide a seamless shopping experience for our customers. We welcome Gabriel and his 22 years of leadership experience in the industry and look forward to adding his fresh perspective and insights to our growing operations.”

— Rodney McMullen, Kroger’s chairman and CEO