Kroger, Ocado join forces as battle with Amazon heats up

FSMNews

FSMNews

Kroger has partnered with British online supermarket Ocado to integrate its technology allowing customers to order online and receive home deliveries.

Ocado is a United Kingdom -based online grocery retailer, operating its own grocery and general merchandise retail businesses under Ocado.com and other specialist shop banners, together with its solutions division.

According to a press release issued by Ocado, it is already working with Kroger to identify three sites in the U.S. for new, automated warehouse facilities. This will bring the company's total investment to more than six percent.

This is a big, behind-the-scenes tech firm, and recently it's been signing big deals with supermarket firms around the world-often sending Ocado's share price soaring.

The two companies are working to identify the first three sites in 2018.

'The opportunity to partner with Kroger to transform the way in which United States 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, ' he said.

"We are actively creating a seamless digital experience for our customers", said Kroger CEO Rodney McMullen in a press release.

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Britain was one of the first countries to see widespread adoption of online grocery shopping, giving its retailers a head start in developing technology to deal with the challenges of delivering food, especially fresh and frozen goods.

Ocado uses purpose-built robots, which are capable of picking a 50-item order in minutes, to man its automated warehouses, Paul Clark, Ocado Chief Technology Officer, wrote in the Harvard Business Review.

Under the partnership, the pair are looking to open three similar sites in the USA this year - with a further 17 in the pipeline.

Kroger operates almost 2,800 stores in 35 USA states and has a turnover of more than $115 billion (£85 bn).

Earlier this month, it inked a deal to build Swedish supermarket ICA's online grocery business and it also has finalised deals with Canadian grocery Sobey's and french supermarket company Groupe Casino. It will take a 5% stake in Ocado as part of the deal.

Neil Wilson, senior markets analyst at Markets.com, said: "Ocado has some protection in the deal as if they fail to hit the capacity target, Kroger will pay compensation".

"Shares are priced for these deals to be coming thick and fast".

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