U.S. deal strengthens Ocado's case to be seen as a tech provider

Galtero Lara
May 17, 2018

The exclusive deal with Kroger - Ocado says it will not work with any other USA retailers - follows similar deals with Groupe Casino, Sobeys and ICA Group.

As we work through the terms of the services agreement 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 United States in the years to come.

It added: "In the longer term, Kroger will retain exclusivity in the USA conditional on it meeting market share targets or ordering an agreed number of CFCs per annum".

Under the terms of the deal, Kroger will also take a 5% stake in Ocado.

The online grocery market in the USA 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.

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'The objective of this partnership is to allow Kroger to redefine the grocery customer experience in the United States through the adoption of the centralised, automated model of online retailing provided by the Ocado Smart Platform, ' Ocado said in a statement.

Rodney McMullen, Kroger's chairman and CEO, described the deal with Ocado as "an innovative, exciting and transformative partnership".

For Ocado, the investment case for the business has always been based on its insistence it could get worldwide grocers to sign up and pay for its technology.

Ocado's technology will be used in the United States exclusively by Kroger, which is one of the world's biggest grocery chains with annual sales of $122bn (£90bn).

"Ocado's unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world".

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