Tuesday, 11 December, 2018

Ocado and Kroger to build online network

Ocado and Kroger to build online network Ocado and Kroger to build online network
Nellie Chapman | 17 May, 2018, 16:48

Kroger, who has the second biggest grocer in the U.S. after Walmart, also agreed to buy a 5% stake in the United Kingdom online supermarket.

According to a press release issued by Ocado, it is already working with Kroger to identify three sites in the USA for new, automated warehouse facilities.

Rodney McMullen, chairman and chief executive of Kroger, said the partnership would allow it to "speed up our efforts to redefine the food and grocery customer experience".

"Ocado's unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world". It will take a 5% stake in Ocado as part of the deal.

It has even said it will pay compensation if it fails to hit the capacity targets the two retailers have agreed.

Online retail specialist Ocado has signed its fourth global deal, with the announcement that it will be supplying its Ocado Smart Platform technology to Kroger in the US.

Ocado' s biggest deal to date, is the latest in a series of tie-ups by the online retailer.

Earlier this month, Ocado named Sweden's ICA for a tie-up involving its Ocado smart platform, and before that inked a deal with Sobeys in Canada in January, and an agreement with French firm Groupe Casino back in November.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said that as one of the most shorted stocks in the United Kingdom - where investors bet that a firm's share price will fall - Ocado's deal with Kroger was a "poke in the eye" for the hedge funds who have bet against it.

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

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.

This values the business at just over £6bn, which, if the stock remains at these heady levels, would catapult Ocado into the FTSE 100.

There are losers in the rapid ascent of the share price - the short sellers betting that Ocado would stumble and fall with the onslaught of the big beasts of online retail, led by Amazon.

Losses incurred today alone by the "shorties" are in excess of £150mln.