Thursday, 21 February, 2019

Ocado breaks into North America with Sobeys partnerhship

Bloomberg Open this
Nellie Chapman | 23 January, 2018, 00:05

Sobeys has roughly 1500 stores across Canada, under various banners such as Safeway, IGA, Foodland, FreshCo, Thrifty Foods, and Lawton's Drug Stores, along with over 350 retail fuel locations.

Shares in online grocer Ocado Group PLC soared early on Monday as the company signed its second worldwide partnership in three months, inking a deal with Canadian food retailer Sobeys Inc.

The as yet unnamed service will allow Sobeys customers to shop for groceries online or via an app, and their order will be assembled, processed and delivered to their door.

Both brands will build a shared automated customer fulfilment warehouse in Toronto to serve customers, which will take approximately two years.

Sobeys is set to hand Ocado upfront fees to fund the project's development, though these fees will be offset by the initial integration of the software and establishment of the partnership.

Ocado will provide a comprehensive and customized suite of support and engineering services to enable a smooth launch and sustainable ecommerce operations.

The latest deal is a third global partnership for Ocado's Smart Platform following on from late November's announcement of an agreement with France's Groupe Casino and the first deal revealed with an unnamed partner last June.

Commenting on the partnership Michael Medline, President and CEO of Sobeys said:"This unique and innovative Sobeys and Ocado experience will offer consumers the biggest selection, freshest products and most reliable delivery available anywhere on the planet".

The FTSE 250 company announced today that it was "delighted" to be working with one of the leading retailers of Canada.

However, it added, in full year 2019 and beyond the profitability of Ocado Solutions is likely to grow as the fees from the transaction increase, and as other deals are signed.