Published: Thu, May 17, 2018
Finance | By Loren Pratt

Ocado signs technology deal with U.S. grocer Kroger

Ocado signs technology deal with U.S. grocer Kroger

Online retail specialist Ocado has signed its fourth global deal, with the announcement that it will be supplying its Ocado Smart Platform technology to Kroger in the US.

Significantly, Kroger will also take a 5% stake in Ocado, worth £183m, as the pair partners up to tackle the threat from the likes of Amazon, which announced a takeover of Whole Foods last summer.

"Ocado's unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world", he said. Kroger and Ocado are working to choose the first three sites for 2018 for development of automated warehouse facilities in the U.S. Ocado said up to a total of 20 facilities will be identified for development over the first three years of the agreement. It started distributing groceries for Waitrose and floated in 2010.

"The company now has an extremely credible partner in the largest grocery market in the world".

Kroger will be Ocado's exclusive partner in the USA and the United Kingdom company said it had ended discussions with Kroger's rivals.

The companies will find three locations for new warehouses this year and said they would find locations for a total.

In the event of a failure to commit to the target capacity, Kroger will shell out compensation to Ocado.

Rodney McMullen, Kroger's chief executive, said the partnership would the grocer "redefine the food and grocery customer experience - creating value for customers and shareholders alike".

Ocado had kept investors waiting for years after setting out a strategy to grow faster by providing its technology to other supermarket chains overseas as well as being an online retailer in its own right.

Ocado said that it expects that the structure of the terms that it will agree with Kroger will be "broadly similar per CFC" to those agreed with its existing worldwide partners: Groupe Casino, in France; Sobeys, in Canada; and ICA, in Sweden.

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