Kroger 2007 Annual Report Download - page 39

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TECHNOLOGY
Kroger has refreshed a significant portion of our overall technology
infrastructure – including data centers, core network and store
communications – to improve the overall availability and sustainability of
our technology platforms. The technology focus has shifted to accelerated
delivery of solutions that affect the customer experience in our stores in
several areas covering interaction with our associates, product delivery,
and other services that we offer.
Research and Development
Kroger is committed to internally-driven innovation. We carefully consider
opportunities that have the potential to redefine existing operating
processes while materially improving the shopping experience of our
customers. We are currently testing several retail innovations that we will
validate in our stores. We are optimistic about our ability to create a
superior shopping experience for our customers while delivering improved
operating efficiencies for our business.
LOGISTICS
Kroger’s logistics network includes 33 distribution centers and has been
restructured to improve efficiency, lower costs, and improve product safety
and quality. Since 1995, Kroger has closed 44 distribution centers and
opened or significantly remodeled 20, for a net reduction of 24.
The new centers contain state-of-the-art racking and product handling
systems, refrigeration, temperature and humidity controls, and space for
cross-docking seasonal and promotional merchandise. Kroger has made
significant investments in leading edge distribution technology, including
warehouse, transportation, and advanced material automation
management systems.
The Kroger Co. Page 39
Many of Kroger’s distribution centers and store delivery fleets have been
outsourced to third-party logistics providers, giving the Company access to
evolving approaches in distribution and more flexibility to implement them.
The ongoing consolidation reduces the capital needed to maintain and
modernize the network, reduces working capital, and lowers product
acquisition costs since larger quantity purchases are possible.