Ocado and Kroger in retail technology deal

Ocado delivery

Ocado delivery

Kroger's deal with Ocado - coming less than a year after Amazon.com bought key Instacart partner Whole Foods - puts more pressure on the 5-year-old San Francisco company that picks and delivers groceries for dozens of other retailers, including Costco Wholesale Corp, Walmart Inc's Sam's Club, Albertsons and Sprouts Farmers Market Inc.

Ocado has signed a partnership with United States grocer Kroger, which will adopt the Hatfield-headquartered company's smart platform to support food distribution activities. As part of the partnership agreement, Kroger will increase its existing investment in Ocado by five percent in a subscription rights agreement.

'After years of starving investors of the worldwide deal they so desperately craved, Ocado has been rattling off transformational tie-ups at an astonishing rate in the last few months, ' said Connor Campbell, financial analyst at Spreadex.

"We are actively creating a seamless digital experience for our customers", Kroger CEO Rodney McMullen said in a statement.

The UK-based online grocer, which has achieved remarkable growth since its foundation in 2002, has teamed up with one of the world's biggest retailers to provide it with its unique technology solutions.

Perhaps the string of tie-ups with big global retail players and yesterday's blockbuster response will force Ocado's critics to acknowledge the online grocer's potential.

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Kroger, which is increasing its stake in Ocado to a total of more than 6%, hailed the Ocado deal as "innovative, exciting and transformative". "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 plan is to roll out three customer fulfilment centres (giant automated warehouses) this year and a total of 20 over three years.

Ocado's technology is able to automate processing and packing of grocery orders online, using a series of robots in its fulfillment centers.

Ocado's Chief Financial Officer Duncan Tatton-Brown said the partnership was "transformational".

This isn't the first such deal for Ocado, which has licensed out its technology to grocery companies in France, Canada and Sweden. The deal helped lift both sets of shares, with Ocado benefitting the most.

Ocado was also upbeat on the deal and its own abilities.

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