Kroger Turns to UK Online Grocer to Lift Its Digital Business

20th Anniversary Of First Online Sale

Kroger Co. and online supermarket Ocado have an exclusive partnership agreement in the US that will automate Kroger warehouses with the help of Ocado's technology.

The online grocer saw shares soar more than 80 per cent during trading yesterday after it announced that Kroger, one of the world's biggest grocery chains with annual sales of $122bn (£90bn), will now use Ocado's technology to automate grocery orders.

The two companies are now working to identify the first three sites to develop new automated warehouse facilities in the US.

Ocado said that it predicts the deal will have a neutral impact on its earnings this year.

"We look forward to innovating together with Ocado to provide our customers the best possible online and in store experience", said Alex Tosolini, Kroger's Senior Vice President of Business Development.

Kroger is one of the largest supermarket chains in the United States, with sales reaching $122 billion in 2017.

Tim Steiner, CEO of Hatfield, England-based Ocado Group, noted that the alliance provides the opportunity to revamp the grocery shopping experience for Kroger's customers as well as the way USA consumers buy groceries.

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Britain was one of the first countries to see widespread adoption of online grocery shopping, giving its retailers a head start in developing technology to deal with the challenges of delivering food, especially fresh and frozen goods. The deal - the British company's biggest yet, according to Bloomberg - will bring Ocado's robotic and digital capabilities to Kroger. Ocado will be Kroger's exclusive partner stateside. Over the first three years of the agreement they are to identify a further 20 sites.

Ocado has already partnered with Groupe Casino, Sobeys Inc. and ICA Group.

Kroger operates almost 2,800 stores in 35 U.S. states and has a turnover of more than $115 billion (£85 bn).

The surprise deal and jump in the share price caught out many hedge funds betting the next move would be down. "We are actively creating a seamless digital experience for our customers".

Here's how leading retail analysts saw Ocado's latest deal.

"It could also lose exclusivity rights, so (it) appears Ocado has given itself some options should this not go as well as planned".

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