The deal, finalized on May 17, 2018, involves Ocado’s technology platform for online retail sales, which are primarily groceries. The technology, as The Financial Times reports, will be used in the U.S. for the first time, exclusively by Kroger. The technology automates online grocery orders.
Ocado is a British online supermarket. In contrast to its main competitors, the company has no chain of stores and instead does all of its home deliveries from its network of warehouses. Ocado recently undertook an ambitious activity to transform its warehouse automation.
Kroger is one of the world’s biggest grocery chains with annual sales of $122 billion. It is the the largest supermarket chain by revenue in the U.S. and the second-largest general retailer (behind Walmart) and the eighteenth largest company in the U.S. As well as having a large sore presence, Kruger recognizes that an increasing number of sales are shifting online.
The technology in question is the Ocado Smart Platform. This is a piece of proprietary software for operating online retail businesses. It combines end-to-end software and technology systems with a physical fulfilment asset solution.
The deal is not only one of technology transfer. Within the terms of the agreement, Kroger will also acquire a 5 percent stake in Ocado. The new agreement is also one of a series of partnerships that Ocado has made with retailers around the world in order to share its innovative technology. The Kroger partnership represents the fourth agreement Ocado has made during the past six months, although this represents its first foray into the U.S. market.
Shares in Ocado were at 552 pence before the deal was announced. Following the announcement the share price increased to 995 pence, before ending the day at 797 pence.
