Kroger Warehouse Closures Hit Ocado’s U.S. Expansion Plans

Shares of British online supermarket and tech firm Ocado tumbled sharply on Tuesday after its major U.S. partner, Kroger, announced the closure of three automated warehouses next January. The decision threatens to slow Ocado’s expansion in the U.S. and reduce its expected revenue by roughly $50 million.

Ocado, known for its robotic customer fulfilment centers, has been working with Kroger since 2018 to scale grocery delivery in the United States. The initial plan envisioned 20 automated sites, but only eight became operational, and now three—located in Frederick, Maryland; Pleasant Prairie, Wisconsin; and Groveland, Florida—are set to close. The remaining five sites will continue operations.

The closures signal a shift in Kroger’s approach to automation. The retailer had earlier hinted at reassessing its network “site-by-site,” reflecting caution after partial deployment of Ocado’s technology. Despite these setbacks, Ocado is expected to receive over $250 million in compensation for early closures.

This development has sparked concerns about Ocado’s ability to secure new partnerships in the U.S., a market critical for its growth strategy. Analysts note that while Ocado continues to support Kroger in optimising logistics at remaining sites, the setbacks highlight the risks inherent in large-scale automation projects.