U.S.: Kroger partners with Ocado to build online grocery network

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U.S.: Kroger partners with Ocado to build online grocery network

U.S. supermarket giant Kroger (NYSE:KR) has announced an exclusive deal with online grocery specialist Ocado to build e-commerce infrastructure in the North American country.

Kroger said the alliance will bring to the U.S. for the first time "the unparalleled technology underpinnings of the Ocado Smart Platform, which includes online ordering, automated fulfillment and home delivery capabilities."

U.K.-based Ocado is listed on the London Stock Exchange and comprises one of the world's largest dedicated online grocery retailers. It has made similar deals with Morrisons in the U.K., Group Casino in France, Sobeys in Canada and ICA in Sweden.

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.

Ocado will partner exclusively with Kroger in the U.S., "enhancing Kroger's digital and robotics capabilities and helping expand its seamless coverage area to provide every family in America", according to a release.

Ocado's share price rocketed by 44% after the deal was announced. They started the day at 552p, rose at one point to 995p, and ended the day worth 797p.

The companies are already working to identify the first three sites in 2018 for development of new, automated warehouse facilities in the U.S., and will identify up to a total of 20 over the first three years of the agreement.

"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," said Kroger chairman and CEO Rodney McMullen.

"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 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.

"Our success as a retailer shows that we can offer customers unrivalled choice, quality and convenience, efficiently and profitably. The opportunity to partner with Kroger to transform the way in which US 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.

"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 U.S. in the years to come."


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