Published: Thu, May 17, 2018
Money | By Armando Alvarado

Ocado signs technology deal with USA grocer Kroger

Ocado signs technology deal with USA grocer Kroger

The British company Ocado has agreed an exclusive deal with Kroger, one of the biggest retailers in America, to use its technology to distribute groceries to its 8.5 million customers.

Ocado CEO Tim Steiner is confident that this deal, and others like it, will "transform the shopping experience of consumers around the world".

The online grocery market in the U.S. is less developed than in markets in western Europe but analysts believe, slowly but surely, more Americans will look to add shopping online to the way they buy food in the years ahead - and the country's largest bricks-and-mortar chains are weighing up how to play in the channel.

The two groups are identifying the first three of 20 new sites for automated warehouses using Ocado's product-sorting and distribution technology, which allows retailers to speed up their online-delivery businesses.

Rodney McMullen, chairman and chief executive, Kroger, comments: "We see Ocado as an innovative, exciting and transformative partnership in pursuit of our Restock Kroger vision".

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

Ocado has broken off talks with other United States supermarket chains following the deal with Kroger.

Russ Mould, investment director at AJ Bell, comments: 'A USA licensing deal helps extend the astonishing momentum displayed by internet-based groceries business Ocado since the company shifted its focus from being a simple online supermarket to a technology platform provider.

The deal boosts Kroger's stake in Ocado, whose shares popped more than 50 percent in premarket trading, by 5 percent to 6 percent.

'A significant milestone in this strategy was marked in November previous year when the company announced its first overseas deal with France's Groupe Casino supermarket brand - providing the company with the necessary kit and technology to launch its own online offering.

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