Ocado to enter United States market with 'transformative' Kroger deal

Ocado to enter United States market with 'transformative' Kroger deal

Ocado to enter United States market with 'transformative' Kroger deal

Kroger Co. and online supermarket Ocado have an exclusive partnership agreement in the USA that will automate Kroger warehouses with the help of Ocado's technology.

The deal with Kroger will be the first time that Ocado has brought its business to the U.S. The company is based out of United Kingdom, where it operates its own retail stores and online grocery delivery. According to a press release, this will bring the company's total investment to more than six percent.

The deal is part of Kroger's 'Restock' initiative that aims to redefine the food and grocery customer experience in America by improving it tech capabilities and will include Ocado's machine learning fraud detection system.

Kroger Chief Executive Rodney McMullen told Reuters it typically takes about two years to get Ocado's roboticized warehouses ready to fill orders and deliver groceries. This is a piece of proprietary software for operating online retail businesses.

Ocado's chief executive, Tim Steiner, described the deal as "transformative" and said it would "reshape the food retailing industry in the USA in the years to come".

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The Ocado CEO said his firm will work with Kroger to roll out up to 20 robotic warehouses across the USA over the first three years of the agreement.

Kroger and Ocado have already begun work on pinpointing three new sites across the U.S.to develop automated warehouse facilities, and expects to identify up to a total of 20 sites over the first three years of the agreement.

'We can only applaud Ocado's success in engaging with the most attractive counterpart in the biggest potential market for online food'.

In the longer term, Kroger will retain exclusivity in the U.S. conditional upon its meeting market share targets or ordering an agreed number of fulfilment centers per year. The Kroger partnership represents the fourth agreement Ocado has made during the past six months, although this represents its first foray into the USA market.

Since 2014, Ocado has been exploring selling its technology and logistics expertise in a service model with an external retailer, and in recent months it has landed partnerships with Sobeys and Casino, Sheehan noted.

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