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Ocado strikes 'transformative' deal with US grocer Kroger

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Ocado's focus on mobile has helped drive its position in the UK market
Ocado's focus on mobile has helped drive its position in the UK market

Online grocer Ocado has clinched a deal that looks set to be a game changer for the company, and that it said would transform the way that groceries are sold in the US. The online retailer and technology specialist said today that it had struck a deal to supply its own-brand commerce platform to US grocer Kroger.

 

It said that it judged $122bn-turnover Kroger to be “the best-positioned to win in US grocery” and that it would end its talks with other US retailers as a result of the new partnership to supply the company with the Ocado Smart Platform.

 

Kroger will also invest in a 5% stake in Ocado, worth £183m, in a move looks set to be a game-changer for the company. As well as operating the UK’s online-only grocer, Ocado also supplies its technology and supporting distribution facilities to Morrisons in the UK, to Groupe Casino in France as well as to other non-grocery retailers in the UK.

 

Ocado and Kroger are now working to identify the first three sites for automated warehouses that are set to open in 2018. Up to 20 will open over the first three years of the agreement. Kroger will retain US exclusivity with Ocado as long as it meets market share targets and orders a certain number of new distribution centres each year.

 

“Ocado’s unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world,” said Ocado chief executive Tim Steiner. “Our success as a retailer shows we can offer customers unrivalled choice, quality and convenience, efficiently and profitably. The opportunity to partner with Kroger to transform the way in which US customers buy grocery represents a huge opportunity to redefine the grocery experience of Kroger’s customers and create value for the stakeholders of both Kroger and Ocado As we work through the terms of the services with Kroger in the coming months, we will be preparing the business for a transformative relationship which will reshape the food retailing industry in the US in the years to come.”

 

Rodney McMullen, chairman and chief executive of Kroger, said: “We see Ocado as an innovative, exciting and transformative partnership in pursuit of our Restock Kroger vision, to serve America through food inspiration and uplift. We are actively creating a seamless digital experience for our csutoemrs. Our partnership with Ocado will speed up our efforts to redefine the food and grocery customer experience, creating value for customers and shareholders alike.”

 

The new partnership comes at a time when technology innovator Amazon is making serious steps to automate grocery in the US market, both through its Amazon Go checkout-free stores and its Amazon Prime fast food delivery business.

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