Kroger moves into H-E-B territory with online deliveries in Austin and San Antonio

Kroger doesn’t have stores in Austin and San Antonio, but its new automated fulfillment center in Dallas will allow it to make online grocery shopping deliveries to residents in those H-E-B-dominated markets.

Kroger said Friday during a meeting with analysts that it’s adding “spoke” facilities in Austin and San Antonio soon.

Kroger is making its moves with its automated facility in southern Dallas just as H-E-B begins its big push in D-FW, where Kroger is the largest traditional grocer after No. 1 Walmart.

H-E-B is opening stores in Plano and Frisco this fall. It broke ground on a third store in McKinney on Thursday that will open in summer 2023. The chain is based in San Antonio and has long dominated that market and Austin, even after Walmart, the largest U.S. grocer, established its biggest footprint in Texas.

Final leases for the Kroger spoke facilities in San Antonio and Austin are still being negotiated. Kroger said they will be in northeast Austin and northeast San Antonio. Each facility has about 70,000 square feet of space and will employ 161 people.

Last month, Kroger said it was entering Oklahoma City, another market where it has no supermarkets, with online-only service from Dallas.

Kroger and its U.K. technology partner Ocado built the 350,000-square-foot automated fulfillment center for online grocery orders. The automated facility feeds a hub-and-spoke system of delivery, allowing Kroger employees to make deliveries to a huge geographic area.

Kroger also said Friday that it’s expanding into Birmingham, Ala., and plans to enter more markets where it doesn’t have stores with online shopping.

Albertsons said Monday that its board has started a strategic review of its business that could include a sale of some of its assets or lead to the company going private.

H-E-B’s expansion in Texas includes Lubbock, which is a stronghold for an Albertsons division, United Supermarkets. Albertsons has grown through consolidations in the past 15 years and in Texas operates under its namesake brand, Tom Thumb, Randalls, United Supermarkets and Market Street.

Twitter: @MariaHalkias

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