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Kroger partners with Ocado to redefine grocery customer experience in US

RBR Staff Writer Published 17 May 2018

US retail giant The Kroger has agreed to use Ocado's technology for grocery and other food distribution related activities.

The companies have signed a partnership agreement, under which Kroger will implement the centralised, automated model of online retailing provided by the Ocado Smart Platform.

As part of the deal, Kroger will increase its existing investment in Ocado by 5% in a subscription rights agreement. 

Ocado will exclusively partner with Kroger, enhancing its digital and robotics capabilities and helping expand its coverage area across the US, with the convenience of shopping for anything, anytime and anywhere.

Kroger chairman and CEO Rodney McMullen 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."

Ocado has also stated that it has agreed to discontinue its discussions with other US-based retailers, as it believes that Kroger to be a well-positioned retailer in the US.

Kroger will pay monthly exclusivity and consultancy fees which will offset in part the total fees that are expected to be agreed between the two companies.

The two companies are already working to identify the first three sites for the development of a new automated warehouse this year. As part of the deal, they will identify up to 20 sites over the next three years. If the companies fail in the commitment, Kroger will pay compensation to Ocado.

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

“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 US in the years to come."

Steiner stated the partnership presents a huge opportunity to redefine grocery experience for Kroger’s customers and in creating value for the stakeholders in both Kroger and Ocado.

Image: Ocado people at work. Photo: Courtesy of Ocado.com.