Ocado bags 'transformative' United States partnership in Kroger deal

Ocado bags 'transformative' United States partnership in Kroger deal

Kroger has partnered with British online supermarket Ocado to integrate its technology allowing customers to order online and receive home deliveries.

As part of the partnership agreement, Kroger will increase its existing investment in Ocado by five percent, bringing its total investment to more than six percent.

According to a press release issued by Ocado, it is already working with Kroger to identify three sites in the USA for new, automated warehouse facilities.

A Kroger spokesman said the Instacart relationship was unaffected by the Ocado deal, adding that it viewed them as "complimentary".

According to Ocado, the partnership aims to allow Kroger to "redefine the grocery customer experience" in the United States by establishing a centralised, automated model of online retailing.

Kroger is one of the world's biggest grocery chains with annual sales of $122 billion.

Ocado CEO Tim Steiner is confident that this deal, and others like it, will "transform the shopping experience of consumers around the world".

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Ocado' s biggest deal to date, is the latest in a series of tie-ups by the online retailer.

Jefferies analyst James Grzinic, who rates the shares a "hold" said those terms represented "the strongest endorsement that Ocado could have delivered to investors".

This isn't the first such deal for Ocado, which has licensed out its technology to grocery companies in France, Canada and Sweden. More than 56 million Ocado shares were on loan on Tuesday, the most recent data from industry tracker FIS' Astec Analytics showed. The deal helped lift both sets of shares, with Ocado benefitting the most.

Kroger Co shares were trading at $25.58 per share on Thursday morning, up $0.64 (+2.57%). "We are actively creating a seamless digital experience for our customers".

In 2016, it was reported that Ocado was close to a deal with Kroger's rival Publix. "Our partnership with Ocado will speed up our efforts to redefine the food and grocery customer experience-creating value for customers and shareholders alike".

Luke Jensen, CEO of Ocado Solutions, told the media on Thursday that getting into the US market would prove a tremendous opportunity as Americans warmed to the idea of online deliveries.

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