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Why did Kroger decide to close Ocado warehouses?
Kroger decided to close some Ocado warehouses because the high-cost, automated model was not economically viable in many US locations. The company is shifting to a hybrid fulfillment approach that combines automation with traditional store-based methods to better suit diverse markets.
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How will this impact Ocado’s growth in the US?
The closures are likely to slow down Ocado's expansion in the US. With fewer automated warehouses, Ocado's ability to scale quickly and compete in the American market could be limited, especially as Kroger moves toward a different fulfillment strategy.
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What does shifting to a hybrid fulfillment model mean?
A hybrid fulfillment model combines automated warehouses with traditional store-based picking. This approach aims to reduce costs and improve flexibility, allowing Kroger to serve more locations efficiently without relying solely on expensive, high-tech warehouses.
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Is automated warehouse technology still a good investment?
Automated warehouse technology remains promising but is not a one-size-fits-all solution. Its success depends on location density and market conditions. Kroger's move suggests that automation needs to be tailored to specific markets to be cost-effective.
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What are the financial implications for Ocado?
Ocado faces revenue hits due to the warehouse closures, but it will receive compensation from Kroger. The company’s future in the US depends on how well it can adapt to the new hybrid model and continue to license its technology in other markets.