Ocado enters lucrative US market with Kroger deal

Ocado Kroger

Ocado has entered the lucrative US market after penning its fifth international deal with grocery retailer Kroger.

As part of the agreement, Ocado’s technology will be used in the US exclusively by Kroger.

The US-based grocer will also take a five per cent stake in Ocado and pay a monthly exclusivity and consultancy fee to the London-listed retailer as part of the tie-up.

Kroger and Ocado are now in the process of identifying three sites across the US for the development of new “automated” warehouses this year.

This will be increased to a total of 20 over the first three years of the agreement.

Ocado said it expected the earnings impact of new deal to be neutral this year.

Kroger has about 2800 retail food stores under a variety of brands and serves nine million customers a day.

“The opportunity to partner with Kroger to transform the way in which US customers buy grocery represents a huge opportunity to redefine the grocery experience of Kroger’s customers and create value for the stakeholders of both Kroger and Ocado,” Ocado chief executive Tim Steiner said.

“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 US in the years to come.”

“We see Ocado as an innovative, exciting and transformative partnership in pursuit of our Restock Kroger vision, to serve America through food inspiration and uplift,” Kroger chief executive and chairman Rodney McMullen said.

“We are actively creating a seamless digital experience for our customers. Our partnership with Ocado will speed up our efforts to redefine the food and grocery customer experience – creating value for customers and shareholders alike.”

The Kroger deal is the latest in a string of overseas partnerships Ocado has struck in the past year, after coming under pressure from investors over a delay in securing international deals after missing a self-imposed deadline of the end of 2015.

Other deals so far locked in by Ocado include one in France with supermarket giant Groupe Casino, in Canada with Sobeys and in Sweden with ICA.

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