Kroger goes live with Ocado ‘spoke’ in Austin

The Kroger Co. has opened an Ocado-automated “spoke” facility in Austin, Texas, to support fulfillment of online grocery delivery orders.

Industrial real estate developer Dalfen Industrial said Tuesday that the 70,000-square-foot Kroger spoke site in Austin held a grand opening and is part of its recently completed Tuscany Logistics Center, which encompasses three Class A distribution centers totaling 373,648 square feet.

Cincinnati-based Kroger has leased the spoke building for six years, while the other two buildings have been leased by Target and Diligent Delivery, according to Dalfen, which describes itself as a leader in the last-mile property sector and focuses on strategically located urban in-fill warehouses and distribution space.

Kroger announced plans for the Austin spoke and a 67,000-square-foot spoke in northeast San Antonio last March. At the time, Kroger said both sites were pending finalization of lease negotiations. The San Antonio spoke went live in late October and was followed shortly thereafter by the opening of a 50,000-square-foot spoke in Oklahoma City.

All three spokes serve as last-mile cross-dock locations and extend the reach of Kroger Delivery service from a 350,000-square-foot, Ocado-powered customer fulfillment center (CFC) in Dallas that became operational in July.

Dalfen noted that its Tuscany Logistics Center, situated in the northeast Austin industrial submarket, provides strong access to both the Austin and San Antonio areas.

“Kroger's selection of Tuscany Logistics for their first last-mile spoke facility in Austin speaks to the quality and strategic location of our development,” Tom Dudney, senior asset manager at Dalfen Industrial, said in a statement. “The expansion of e-commerce grocery delivery services is a prime example of why last-mile industrial real estate continues to be in such high demand across the nation.”

In total, Kroger now has 13 Ocado-automated spokes in operation. The 40,000- to 80,000-square-foot facilities can expand delivery service of the CFC “hubs” to up to 200 miles. Most recently, Kroger opened a 60,000-square-foot spoke in Opa-Locka, Florida, that supports a CFC in Groveland, Florida, that launched in June 2021.

Besides the Austin, San Antonio, Oklahoma City and Opa-Locka facilities, Kroger has spoke sites in Birmingham, Alabama; Nashville; Maywood, Illinois; Miami, Tampa and Jacksonville, Florida; Lockbourne, Ohio; Indianapolis; and Louisville, Kentucky. The Oklahoma City spoke expanded Kroger’s market reach to 36 states; the supermarket giant has no physical stores in Oklahoma.

Kroger in May 2018 unveiled an exclusive U.S. partnership with U.K.-based online grocery specialist Ocado Group to identify sites for about 20 automated CFCs over the ensuing three years. The high-tech CFCs use Ocado’s vertical integration, machine learning and robotics to fill e-grocery delivery orders and extend Kroger’s market coverage to a larger geographic footprint, including areas where it doesn’t operate brick-and-mortar stores.

Thus far, Kroger has announced 17 Ocado CFCs—ranging from 135,000- to 375,000 square feet—and seven are open. The Groveland location marked the first CFC in a state where Kroger generally doesn’t operate physical stores, save for one Harris Teeter store in Jacksonville.