Kroger’s Hybrid Model to Boost Digital Profits by $400M with DoorDash Partnership
Kroger is closing three automated fulfillment centers and shifting to a hybrid model using its 2,700+ stores while expanding partnerships with Uber Eats, DoorDash, and Instacart. Management projects this pivot will boost e-commerce profitability by $400 million in 2026, increasing delivery volume and revenue for DoorDash.
1. Fulfillment Strategy Overhaul
After taking a $2.6 billion impairment loss tied to three automated fulfillment centers, Kroger is abandoning its dedicated sheds in favor of a store-based hybrid model. This strategy uses its network of over 2,700 supermarkets to pack and ship orders, significantly lowering capital expenditures and leveraging existing real estate.
2. DoorDash Partnership Expansion
Kroger is deepening its relationship with DoorDash alongside Uber Eats and Instacart to manage last-mile delivery. Under the new arrangement, DoorDash will handle a substantial share of order volumes, offering delivery in as little as 30 minutes, a capability centralized warehouses cannot match.
3. Profit Projection and Partner Impact
Management forecasts that moving to the hybrid model will improve e-commerce profitability by approximately $400 million in fiscal 2026. This profitability boost is expected to translate into higher delivery volumes and incremental revenue for DoorDash as a key logistics partner.