Ocado breaks into North America with Sobeys partnership

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Sobeys

Ocado has penned a new major deal with Canadian retailer Sobeys as it continues to ramp up its international expansion efforts.

In its first venture into North America, the British online grocery retailer is set to establish a foothold in Canada via a partnership with Sobeys, which has an estate of over 1500 stores.

News of the partnership, in which the two companies aim to construct a warehouse to supply Toronto before 2020, has sent Ocado share prices up around 12 per cent to 462.7p per share.

“Channel shift to online in North America is gaining pace as consumers increasingly seek the benefits of grocery shopping from the comforts of their own homes, and as retailers attempt to offer services to meet this growing customer trend,” Ocado chief executive Luke Jensen said.

“Soon Sobeys, along with Ocado, Morrisons and Groupe Casino, will be powered by Ocado Smart Platform, sharing a common goal of harnessing the best technology for grocery ecommerce to win in their markets.

“We look forward to welcoming more major grocers to this list going forward.”

Sobeys is set to hand Ocado upfront fees to fund the project’s development, though these fees will be offset by the initial integration of the software and establishment of the partnership.

This means that Ocado expects to be earnings-neutral for the year, but has stated that the deal will add “significant long-term value to the business”.

A similar deal with France’s Groupe Casino was agreed in November last year.

Construction on a warehouse to supply Paris, Normandy and Hauts de France has already started, with completion expected within two years.

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