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King Soopers parent Kroger partners with world's largest online grocery supermarket

18 May, 2018, 15:08 | Author: Melinda Barton
  • Ocado cadges Kroger in exclusive US technology supply deal

Kroger Co. has signed an agreement with UK-based Ocado Group Plc to bring that grocer's platform of home delivery into the US, the two companies jointly announced on Thursday.

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

Kroger will increase its existing investment in Ocado by 5% in a subscription rights agreement.

Under the deal, Ocado and Kroger [which now partners with Instacart and offers click and collect from store services for online shoppers] will identify the three initial sites for automated "dark" warehouse facilities in the United States as part of a plan to build up to 20 sites over three years.

The deal with Kroger is arguably Ocado's biggest to date and demonstrates that the company's technology push is starting to gain traction after some five years or so of pushing it. The Kroger partnership represents the fourth agreement Ocado has made during the past six months, although this represents its first foray into the USA market.

Ocado chief executive Tim Steiner said the deal would be "transformative" for the business.

If the Ocado partnership gives Kroger the confidence to bring delivery in-house, "that will be disastrous for Instacart", said Neil Saunders, managing director of GlobalData Retail.

As part of the partnership with Ocado, the group will adopt the Ocado Smart Platform.

The move arrives as Kroger has made a commitment to spend some savings that were generated by the corporate tax reform, on different digital initiatives. The online grocery delivery aspect of the business is what is coming to the U.S. Over the next three years, they will aim to find locations for 20 fulfilment warehouses. It has struck partnerships with Groupe Casino in France, Sobeys in Canada, and ICA Group in Sweden.

Shares of Kroger, based in Cincinnati, rose almost 3 percent in premarket trading.

Ocado is known for fast deliveries and, according to CNN Money, Ocado said it will be helping Kroger with warehouse operations, logistics, delivery route planning and automation. If the retailer fails to hit volume targets it could also lose exclusivity and will have to pay compensation to Ocado.

Ocado's share price rocketed by 44% after the deal was announced.



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