AI is making grocers rethink e-commerce in the wake of a move by Kroger to close three of its eight distribution centers in January 2026. The move is a major reversal. In 2018, Kroger said it would build 20 robotic fulfillment centers in partnership with Ocado, but the centers proved to be more costly to operate than anticipated. Hastening the decision-making process was the rise of AI tools on the grocery front lines. Kroger says it will use e-commerce services like Instacart, Uber Eats and DoorDash to reach customers in under 30 minutes. Kroger expects these partnerships will boost e-commerce profitability by $400 million in 2026.
Kroger operates 2,700 stores in 35 states. The three fulfillment centers closing are located in Pleasant Prairie, WI, Frederick, MD and Groveland FL. Kroger says it will take a $2.5 billion charge to third quarter fiscal 2025 earnings as a result. Partner Ocado will get $250 million in compensation as well. It is likely Kroger’s remaining fulfillment centers also will come under review.
Kroger’s move doesn’t come without local pain. The closure of Kroger’s central Florida distribution center, for example, means the loss of 1,000 jobs, reports local media. Local government also is trying to recoup some of the $1.3 million in incentives annually awarded to Kroger while allocating $400,000 for job placement services. Kroger employs approximately 400,000 people nationwide.
Kroger is filling its e-commerce void with services that already have a high profile when it comes to food. The use of DoorDash was expanded in October to include fresh foods, household goods and other products beyond the limited offerings previously. The partnership with Uber Eats Marketplace is expected to begin in early 2026.
The deal with Instacart, however, illustrates how deeply AI is penetrating the grocery store experience. A collection of AI enterprise solutions for grocers includes a Cart Assistant available as an app or on the website which offers shoppers personalized meal planning, budgeting and product recommendations. A similar AI assistant also is planned for Sprouts Farmers Market.
From a managerial point-of-view, a key feature is Store View which provides grocers with real-time views of store shelves to identify with images and videos which products are running low or out of stock. Store View also is used by McKeever’s and Global Food Holdings. Other AI-driven systems include a catalog and agentic analysis of retail data for business insights. Instacart says its AI-centric platform currently serves 600,000 customers and that it partners with 1,800 retailers to facilitate online shopping. Instacart says it is working with AI companies like OpenAI, Microsoft and Google to develop next-generation digital agents tailored for grocery shopping. One likely development is something along the lines of OpenAI’s new feature called Instant Checkout that allows ChatGPT users to make purchases directly from participating merchants.
