Dallas: Kroger’s New Customer Fulfillment Center Going Forward, Backed by Tax Abatements
Featured Photo (above): Kroger Co. will develop a 350,000-square-foot order-fulfillment warehouse on 55 acres along between Telephone, Bonnie View and Cleveland roads in Dallas’ South Side. Image: Google Streets
By Edmond Ortiz
Dallas (Dallas County)–Cincinnati-based grocery retailer Kroger Co. and Ocado, an online grocer retailer based in England, are proceeding with plans to develop a Customer Fulfillment Center (CFC) on a 55-acre tract south of Interstate 20 in south Dallas.
The announcement for a new CFC came more than a week after City Council voted Aug. 28 to approve $5.7 million in tax abatements and bond funds to support the new 350,000-square-foot warehouse, which Kroger officials said could help to address food desert issues in the area.
The Dallas CFC will be located at the northwest corner of Telephone and Bonnie View roads, on a mostly undeveloped property. It is scheduled by the grocer to break ground in early 2020 and become operational within 24 months.
Kroger has promised to build up to 20 CFCs, all of which will be programmed by Ocado. Each CFC will be an automated warehouse with digital and robotic capabilities, and outfitted to quickly fulfill online orders in and around the immediate area.
The Dallas CFC is expected to create up to 400 jobs, according to the tax abatement requirements.
Kroger and Ocado will invest a minimum total capital investment of $100 million, of which at least $35 million will be for land development and improvements at the project site.
Kroger broke ground in June on its first CFC in Monroe, Ohio, and in July on a CFC in Groveland, Florida. The grocer already plans to build CFCs in Georgia and in the Mid-Atlantic region, too.
“Kroger is incredibly excited to construct one of our industry-leading Customer Fulfillment Centers in Dallas, Texas — one of the largest cities in America — in relationship with Ocado to bring fresh food to our customers faster than ever before,” said Robert Clark, Kroger’s senior vice president of supply chain, manufacturing and sourcing, in a news release.
“Through our strategic partnership, we are engineering a model for the region, leveraging advanced robotics technology and creative solutions to redefine the customer experience for our customers in North Texas and across America.”
“This announcement of Kroger’s latest automated warehouse in Dallas marks another big moment in the U.S. grocery e-commerce story,” added Luke Jensen, CEO of Ocado Solutions, in the release. “I’m delighted we can bring the cutting-edge innovation of the Ocado Smart Platform to Kroger’s operations in such an important market.
Tom Schwilke, president of Kroger’s Dallas regional operations, said that given overall growth in the Dallas/Fort Worth area, Kroger’s partnership with Ocado will play a key role in continued business growth in the region.
Kroger Co. plans to build its fifth customer fulfillment center on this mostly undeveloped tract in south Dallas. Image: City of Dallas/Kroger
“This transformative fulfillment center will create local jobs and accelerate Kroger’s ability to expand our products and services to a larger footprint, providing customers with anything, anytime, anywhere,” he added.
Representatives for Kroger and Ocado said continuing improvements in internet access speed and mobile devices demonstrate greater potential in building warehouses to fulfill online grocery orders.
Kroger, which runs nearly 100 stores in North Texas, had sought from the city of Dallas 10-year property and five-year business personal property tax abatements totaling $3.7 million, and $2 million in designated economic development funds from the city’s 2012 bond issue.
The company also has asked the city to nominate the CFC for designation as a Texas Enterprise Zone project, a state sales tax refund program. The estimated net present value of city revenues is $13.1 million over a 10-year period.
Kroger Co. will develop a 350,000-square-foot order-fulfillment warehouse on 55 acres along between Telephone, Bonnie View and Cleveland roads in Dallas’ South Side. Image: Google Streets
The tax abatement agreement also outlines how the project site is surrounded by low-income neighborhoods where residents lack immediate access to fresh produce and healthy food options.
Aside from developing the CFC, Kroger agreed to look for potential new store sites in south Dallas. In the meantime, Kroger promises to meet with city officials to discuss how best to improve its lone existing South Side store.
Kroger representatives assured council members that the company would not red-line neighborhoods in terms of fulfilling orders, which is something that has happened with other e-commerce grocers’ attempts to serve the area.
Other council members asked the city to try and bridge the digital divide so that more low-income residents or those with no internet service could access Kroger’s planned e-commerce services.
According to the abatement agreement, Kroger also pledges to have at least 25% participation by minority-and/or women-owned businesses in construction-related expenses at the CFC site.
Edmond Ortiz is a lifelong San Antonian and a 20-plus-year veteran in local journalism, He previously worked full-time at the San Antonio Express-News, and has been freelancing for outlets such as the Rivard Report.