Scott Bourque/KJZZ

The first transaction at the Fry's store in downtown Phoenix on Oct. 23, 2019.

A development agreement between Arizona’s largest grocer and the city of Phoenix could lead to changes in the way people get their groceries.

Kroger, known locally as Fry’s, will work with Ocado, a British supermarket with no physical stores, only online operations. Ocado partners with grocers globally and plans to open more robot-equipped fulfillment centers this year. 

“Kroger continues to accelerate the expansion of our national network to redefine the customer experience,” said Gabriel Arreaga, Kroger's chief supply chain officer, said in a press release. “Our partnership with Ocado is and will continue to be rooted in our ability to deliver a value-added customer-centric solution that brings fresh food to customers through our seamless ecosystem.”

The Kroger-Ocado partnership, which started in 2018, includes 20 automated customer fulfilment centers in the United States, including one in Phoenix.

On Wednesday, council members approved a deal to pay Kroger up to $692,000 over a four-year period. It works out to $1,000 for each new net employee that earns at least $44,000 annually in their second year of employment. 

The Arizona Department of Commerce said: "Kroger may be eligible for the Quality Jobs tax credit in the amount of up to $4,698,000. The Quality Jobs tax credit offers up to $9,000 of Arizona income or premium tax credits spread over a three-year period for each net new quality job ($3,000 per year), provided the wages meet statutory requirements. The primary goal of the Quality Jobs tax credit is to encourage business investment and the creation of high-quality employment opportunities in the state.   

"With Kroger we are developing a game-changing ecosystem for serving online grocery to customers across the United States. This includes Ocado's automated CFCs across a range of sizes, as well as software to optimize fulfilment in stores for curbside pickup." said Luke Jensen, CEO of Ocado Solutions, said in a press release. "Powered by Ocado's state-of-the-art, proprietary technologies, this site will be crucial in bringing unrivalled online grocery experiences to homes across Arizona and wider geographies.” 

According to a city report, Kroger intends to create up to 692 new jobs within five years and spend about $89 million to build a 222,850-square-foot fulfillment center. 

The report stated: “Kroger is conducting due diligence for locations within Phoenix and a site will be identified before entering into a Development Agreement.”