A Brief Primer on Kroger's Distribution Network

The fifth largest employer in the country has a lot of brands, a lot of production plants, and a high tech fulfillment network

Walmart is by far the largest grocery retailer in the country, with 21.4% market share. Kroger is a distant second at 8.9%, but it is still the fifth largest employer in the country with 409,000 employees. From what I can tell, the only grocers in the United States that do $100 billion or more in grocery sales every year are Walmart ($276 billion in grocery sales in 2024), Kroger ($147 billion), and Costco ($135 billion sales in foods, sundries, and fresh foods). It’s notable that Amazon doesn’t even break out Whole Foods or Amazon Fresh for mention in its 10-K.

Kroger started in the late nineteenth century in Cincinnati, OH, where it is still headquartered today. It has grown tremendously through mergers and acquisitions, and still operates most of the companies it’s taken over under their own brand names. These include Baker’s, City Market, Dillons, Food 4 Less, Foods Co, Fred Meyer, Fry’s, Gerbes, Harris Teeter, Jay C Food Store, King Soopers, Mariano’s, Metro Market, Pay-Less Super Markets, Pick’n Save, QFC, Ralphs, Ruler, and Smith’s Food and Drug - totaling more than 2,700 stores altogether. For the most part, all of these stores are served by one integrated distribution network, with the seeming exception of Harris Teeter, which merged with Kroger in 2014. From what I can tell, Harris Teeter still operates its own distribution facilities.

Last year, a proposed merger between Kroger and Albertsons, the two largest pure grocers in the country, was challenged by the Federal Trade Commission and blocked in the courts. Albertsons eventually pulled out of talks in December 2024. The deal would have given Kroger double-digit market share, but it would have still been significantly behind Walmart. Just this month, Kroger announced it would be closing 60 underperforming stores.

Open the map of Kroger’s Distribution Network here

As with all of our brief primers, this one comes with a map of Kroger’s distribution network. As always, please email ontheseams.newsletter@gmail.com with any updates.

Distribution Centers

By my count, Kroger operates 55 Distribution Centers, which supply its 2700+ stores. Some are perishables-only distribution centers, but most seem to do a combination of dry grocery, frozen, refrigerated, and general merchandise.

DCs are not very complicated operations: pallet racks to the ceiling in warehouses that range in size from 150,000 square feet to 1.5 million square feet, with workers in powered industrial trucks (PITs) driving around pallets to be stored or to be loaded onto trucks.

Fulfillment Centers and Spokes

Kroger launched its first Fulfillment Center during the pandemic in April 2021; today it has 8 Fulfillment Centers and 12 Spoke facilities, the latter essentially extending the range of fulfillment. As an example, the Fulfillment Center in Groveland, FL (375,000 square feet, employing more than 1,000 people) will pack up someone’s online order in 5-10 minutes, and then send it out in a refrigerated van to somewhere within 90 minutes of that facility. But it will also batch orders from farther away to one of its Spoke facilities - for instance, in Jacksonville (60,000 square feet, about 250 people) - to extend the reach of its Fulfillment Center. Delivery vans in the Jacksonville area then pick up from that Spoke facility.

They use the Ocado Smart Platform for automated stowing and picking, as depicted here:

Somewhat remarkably, Kroger Delivery is an in-house delivery operation: they’re Kroger’s refrigerated vans driven by actual Kroger employees. If “free shipping” ever catches on in grocery as it has in other distributional retail, there will likely be a race to the bottom in grocery last-mile too. But maybe the particularities of the cold chain will prevent this from happening.

Central Fills

Central Fills are where prescriptions are fulfilled in bulk and then sent to individual store pharmacies. The one in Jeffersonville, IN serves about 160 stores and employs 170 people.

Production Plants

Kroger runs 35 production plants for its own brand-name goods (Kroger, Simple Truth, Private Selection, Smart Way, Heritage Farm, and many others): 18 Dairy Plants, 8 Grocery and Beverage Plants, and 9 Bakery and Deli Plants. Its meal kit line, Home Chef, has its own production facilities, five of them. Home Chef was acquired by Kroger in 2018.

Kroger’s Mountain View Foods Dairy Plant in Denver, CO sends out 70-80,000 gallons of milk/day.

If the estimate that every American consumes about 15.75 gallons of milk/year is right, that’s 14.6 million gallons a day for 340 million people. And if every Kroger Dairy Plant is producing about as much as Mountain View Foods does, Kroger is directly supplying between 1.26 million and 1.44 million gallons of it (8.6-9.9%).

Union Presence

Kroger is the largest employer in the country to have a significant union presence, followed closely behind by UPS. The United Food and Commercial Workers represent about 2/3 of Kroger store workers, and there are hints here and there that some of those contracts also include distribution warehouse workers, but I haven’t found much information online about which warehouses are union.

The Teamsters have had some success organizing within Kroger’s distribution network recently, including 289 drivers at their Romulus, MI Fulfillment Center and 30 more at the Forest Park, GA Fulfillment Center (though there are definitely more than 30 drivers working out of Forest Park - not sure if they were just still staffing up, but that number is probably higher than 30 at this point). They also have contracts at a few Washington distribution facilities as well.