Can Kroger help Ocado crack America?

Can Kroger help Ocado crack America?

Can Kroger help Ocado crack America?

USA retailer Kroger has signed a landmark deal with Ocado to use its technology for grocery deliveries, marking the British online grocer's first entry into the United States.

The opportunity to partner with Kroger to transform the way in which U.S. 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.

Kroger, the largest US supermarket chain by revenue, operates about 2,780 supermarkets in the USA and has some 443,000 employees.

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The agreement, Kroger's response to Amazon's purchase of Whole Foods, takes Ocado's home-delivery platform into the USA for the first time and marks the fourth major deal it has signed with supermarkets in six months.

The two groups are identifying the first three of 20 new sites for automated warehouses using Ocado's product-sorting and distribution technology, which allows retailers to speed up their online-delivery businesses.

The deal should help Kroger compete with Amazon, which has entered the grocery delivery market in a big way.

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"The objective of this partnership is to allow Kroger to redefine the grocery customer experience in the U.S. through the adoption of the centralised, automated model of online retailing provided by the Ocado Smart Platform", thunders today's statement.

Ocado had kept investors waiting for years after setting out a strategy to grow faster by providing its technology to other supermarket chains overseas as well as being an online retailer in its own right. As part of the agreement, Kroger will buy a 5% stake in the British company by purchasing more than 33.1 million new, ordinary shares at a value of GBP183 million ($247 million).

Ocado CEO Tim Steiner said he expected the "transformative relationship" to reshape the food retailing industry in the United States.

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Ocado said that it predicts the deal will have a neutral impact on its earnings this year.

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