UK retailer Ocado is to supply its Ocado Smart Platform technology to giant US food retailer Kroger.
Kroger will purchase five per cent of the existing issued share capital of Ocado for £183 million as part of the partnership. In turn, Ocado will enhance Kroger’s digital and robotics capabilities to help expand its coverage area.
Kroger is to pay monthly exclusivity and consultancy fees to Ocado which will partially offset in part the total fees that are be agreed between the two parties. Ocado has also agreed to discontinue discussions with other US-based retailers. Kroger will be required to pay compensation to Ocado should it fail to commit to the agreed target capacity.
The two companies are currently working to identify the first three sites to develop new automated warehouse facilities in the US. Over the first three years of the agreement they are to identify a further 20 sites.
“We see Ocado as an innovative, exciting and transformative partnership, said Kroger chairman and CEO Rodney McMullen. “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 has already partnered with Groupe Casino, Sobeys Inc. and ICA Group. This is “a transformative relationship which will reshape the food retailing industry in the US in the years to come,” said Ocado chief executive Tim Steiner.
Kroger operates nearly 2,800 stores in 35 US states and has a turnover of more than $115 billion (£85 bn).