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Ocado strikes deal with US grocery retailer Kroger

Ocado has signed a partnership agreement with US grocery chain Kroger that will see its technology be used exclusively by the US retailer for grocery and other food distribution related activities.

According to the deal, Kroger will pay “monthly exclusivity and consultancy fees” and will also take 5% of the existing issued shared capital of Ocado, at a value of £183m.

In addition, Ocado will “discontinue discussions with other US-based retailers”, as part of the agreement.

Ocado and Kroger said they are already working to identify the first three sites in 2018 for development of new, automated warehouse facilities in the US, and will identify up to a total of 20 over the first three years of the agreement.

If Kroger fails to commit the target capacity, it will pay compensation to Ocado.

In the longer term, the US retailer will retain exclusivity in the US conditional on it meeting market share targets or ordering an agreed number of CFCs per annum.

Tim Steiner, CEO of Ocado, said: “Ocado’s unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world. 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.”

Rodney McMullen, chairman and CEO of Kroger, said: “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.

“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.”