Following the penning of similar deals with Groupe Casino and Sweden's ICA, online retailer and services provider Ocado has announced a partnership with Kroger in the US.
Under the terms of the partnership, Ocado's Smart Platform technology will be used by Kroger for grocery and other food distribution related activities.
'The objective of this partnership is to allow Kroger to redefine the grocery customer experience in the US through the adoption of the centralised, automated model of online retailing provided by the Ocado Smart Platform,' Ocado said in a statement.
Following the signing of the deal, Ocado said that it will discontinue discussions with other US-based retailers, with Kroger set to pay exclusivity fees to the UK-based operator which will offset in part the total fees to be agreed between the two parties.
In addition, Kroger is to subscribe for more than 33 million new ordinary shares in the capital of Ocado, which is equivalent to 5% of the existing issued share capital of the business, at a value of £183 million.
Site Development
The two businesses are currently working on the development of three sites that will feature automated warehouse technology operating under Ocado's Smart Platform, and will seek to identify up to 20 such sites over the first three years of the agreement. In the event of a failure to commit to the target capacity, Kroger will pay compensation to Ocado.
"Ocado's unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world," said Tim Steiner, CEO of Ocado.
"Our success as a retailer shows that we can offer customers unrivalled choice, quality and convenience, efficiently and profitably. 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."
Steiner added that as the two business work through the terms of the service agreement over 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."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
