Grocery giant Kroger breaks into Austin market with e-commerce delivery service

Although it doesn't have any stores in Austin, Kroger Co. — the country’s largest grocery retailer — is breaking into the Austin market with a new e-commerce delivery service that is expected to create more than 160 jobs.

The Cincinnati, Ohio-based chain said it will build a 70,000-square-foot facility in Northeast Austin that will start operations this year. The site is expected to employ up to 161 people, Kroger said.

The Austin facility will be powered by a fulfillment center in Dallas. The service is part of a partnership between Kroger and Ocada, a UK-based leader in technology for grocery e-commerce.

To use the delivery service, customers place an order on Kroger.com or the Kroger app for food and household products. Using bots, which are operated by software to perform automated, repetitive tasks, the products are retrieved from facilities and are then sorted for delivery. After being packed, groceries are delivered via refrigerated vans to customers.

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Kroger was founded in 1883 by Bernard Henry Kroger, who was the son of German immigrants. Today, the company is the largest supermarket chain in the United States and the second-largest overall retailer behind Walmart. 

The company reported revenue of $137.9 billion in 2021, compared to compared to $132.5 billion for the same period the previous year. It operates 2,800 stores operating under names including the Kroger, Harris Teeter and Smith’s. 

“Kroger today looks very different than it did in 1883 when we opened our first store,” Rodney McMullen, Kroger CEO, said in a written statement. “I’m incredibly excited for the future of Kroger, and both thriving physical stores and digital solutions are part of it.”

Kroger is also expanding into San Antonio and Birmingham, Alabama. The growth plans follow the company's entry into Florida in 2021 without operating physical stores.

The entrance of Kroger will present new competition for H-E-B, Austin’s dominant grocer. The San Antonio-based company has invested heavily in the grocery delivery space after buying Austin-based delivery service Favor in 2018.

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Today, Favor has a network of tens of thousands of runners delivering restaurant meals, groceries and other purchases around the clock.

Austin-based Whole Foods Market also offers delivery services through its parent company Amazon.com.

Opportunity Austin, the Greater Austin Chamber of Commerce's economic development arm, partnered with Kroger's economic development team to create the expansion.

“We welcome the opportunity that Kroger’s innovative and modern grocery delivery service will bring to residents of the Austin region,” said Charisse Bodisch, Austin Chamber senior vice president, economic development.

“Austin continues to be a hub for innovation and Kroger’s use of advanced robotics, automation, and AI enabling the retailer to launch this new service locally and is making inroads for the future of grocery delivery,” she said.

Last year, companies of various sizes announced plans to create 26,697 new jobs in Central Texas — marking an increase of 21% from the previous record of 22,114 jobs announced in 2020, according to Opportunity Austin.

Central Texas is currently undergoing a tech expansion boom, led by electric automaker Tesla, which has moved its headquarters here. The company is building a $1.1 billion manufacturing facility in southeast Travis County, where it has begun production of its Model Y electric SUVs.

In addition, tech giant Samsung recently picked a site near Taylor to build a $17 billion semiconductor manufacturing facility. A number of other technology giants — including Apple, Facebook, Google and Amazon — have also recently expanded their operations in Central Texas.