Kroger, fending off online rivals, ups stake in UK's Ocado

The deal with Kroger takes Ocado's home-delivery platform into the US for the first time

The deal with Kroger takes Ocado's home-delivery platform into the US for the first time

Remember too, Ocado counts Morrison Supermarkets PLC (LON:MRW) as one of its customers, having run the technology and delivery network for the Bradford-headquartered supermarket chain's online operation since it launched in 2014.

In the deal, Kroger will be able to offer its customers Ocado Smart Platform's online ordering technology, automated fulfillment, and home delivery capabilities, enhancing the USA retailer's digital and robotic operations which its said will provide every family in America with the convenience of shopping "anywhere" and "anytime".

The deal boosts Kroger's stake in Ocado, whose shares popped more than 50 percent in premarket trading, by 5 percent to 6 percent.

Shares in Ocado are up by more than 250% over the last six months, as the company has finally delivered on expectations of an global expansion.

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The partnership not only brings Ocado's technology to the USA but also provides a broad e-commerce solution that is exclusive to Kroger here, according to Mike Schlotman, executive vice president and chief financial officer at Kroger.

Ocado has broken off talks with other U.S. supermarket chains following the deal with Kroger, which operates nearly 2,800 stores across the USA under various brands.

"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", he said.

The retailer's efforts to create a "seamless digital experience" for customers would speed up as a result, he added.

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The Ocado CEO said his firm will work with Kroger to roll out up to 20 robotic warehouses across the USA over the first three years of the agreement.

Earlier, jaws dropped as the United Kingdom online grocer signed a technology and fulfilment deal with America's largest chain of supermarkets; a company that generated US$122bn in revenues a year ago. The online grocery delivery aspect of the business is what is coming to the U.S. It has also positioned them in their long term battle against Walmart and Amazon.

Tatton-Brown said the detailed financial terms still had to be agreed, but the deal was expected to be neutral in respect to earnings in the full-year 2018.

Ocado has always been considered a weak link in the supermarket sector by some analysts who brand it grossly overvalued.

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The Kroger deal is "seismic" for Ocado, which has been looking to break into the US for some time, according to Bryan Roberts, Global Insights Director at tcc global.

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