Ocado to automate Kroger warehouses in exclusive U.S. deal
When Sobeys announced in January that it had signed a deal to have Ocado, the British e-grocer, build and operate an automated warehouse in Canada, one of the logical questions was whether a U.S. chain would soon announce a similar agreement. Today, the question was answered in the affirmative as Kroger announced it has reached an exclusive U.S. deal to have Ocado develop automated warehouse facilities for its business.
“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,” said Rodney McMullen, Kroger’s chairman and CEO, in a statement. “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 two companies are currently working together to identify the first sites to develop new, automated warehouses for Kroger this year. The companies plan to identify as many as 20 such locations for the same purpose over the next three years.
Kroger CFO Michael Schlotman told CNBC’s “Squawk Box” that the deal with Ocado is not just about the retailer’s online business.
“They have capabilities that will also help us provide piece pick items to our stores so that will help our logistics,” he said.
The deal between the two companies calls for Kroger to increase its investment in Ocado by five percent as part of a subscription rights agreement. Kroger’s total investment in Ocado with the new agreement will grow to more than six percent.
Kroger’s deal with Ocado is exclusive for the U.S. and is intended to enhance Kroger’s “digital and robotic capabilities.”
Ocado, which operates Morrison’s online business in the U.K., has struck deals with Groupe Casino in France and ICA Group in Sweden in addition to those with Sobey’s and Kroger.
- Kroger Partners with Ocado to Serve Customers Anything, Anytime, Anywhere in U.S – The Kroger Co.
- US grocer Kroger’s online delivery deal sends Ocado shares rocketing – CNBC
- Ocado shares rocket on Kroger tech deal – BBC News
- Does Sobeys deal mean the U.S. is next for Ocado – RetailWire
DISCUSSION QUESTIONS: What will the Ocado deal mean for Kroger’s businesses across the U.S.? Do you think retailers that compete with Kroger will seek out similar deals to automate their warehouses?