CINCINNATI — Answering Amazon.com’s encroachment on the retail food business, Kroger Co. has inked a deal with online British supermarket Ocado to accelerate the American grocer’s e-commerce offering.
The alliance will mark the U.S. debut of the technology underpinnings of the Ocado Smart Platform, which includes online ordering, automated fulfillment and home delivery capabilities.
As part of the partnership, Kroger will increase its existing investment in Ocado by nearly fivefold in a subscription rights agreement. This will bring the company’s total investment to more than 6%. Ocado will partner exclusively with Kroger in the U.S., enhancing the latter’s digital and robotics capabilities and helping expand its coverage area to provide online shopping across America.
“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. “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.”
“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 Group. “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. As we work through the terms of the services agreement with Kroger in the coming months, we will be preparing the business for a transformative relationship which will reshape the food retailing industry in the U.S. in the years to come.”
Kroger and Ocado are already working to identify the first three sites in 2018 for automated warehouse facilities in the U.S., and will identify up to a total of 20 over the first three years of the agreement.
“We look forward to innovating together with Ocado to provide our customers the best possible online and in store experience,” said Alex Tosolini, Kroger’s senior vice president of business development. “Through Restock Kroger, we will continue expanding partnerships to create customer value.”
The new relationship is not expected to affect Kroger’s earnings per diluted share guidance range for 2018 and 2019 as it is already reflected in the Restock Kroger plan.