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Kroger inks Pact with U.K. Online Grocer to build on Delivery Network

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Published on : May 18, 2018

The rapid inroads made by stalwarts in the e-commerce industry in recent times has raised the ante markedly higher for grocery stores and supermarket chains. Nowhere is this more marked than in developed markets thrived by behemoths with the likes of Amazon and Walmart. Players in the offline segment of the industry seek to cut the mustard with disruptive forces of technology, notably by deploying robotics, apart from undertaking other bold strategic moves. The path to such moves begins with strategic collaborations and partnerships with providers of such technologies. The Kroger Company (Kroger), a U.S.-based supermarket chain has on May 17, 2018 inked a deal with a U.K.-based online grocery store Ocado that will enable it to automate the warehouses with robots. The British online supermarket Ocado is known for staffing its warehouses with robots who fill the orders really quickly.

Kroger can License Ocado’s Warehouse Robotics Technology putting tough Battle for Amazon

The current partnership made by Ocado is its first foray into the U.S. market and the fourth in series of strategic agreements it has made with retailers in recent years. The recent deal will pave way for Ocado to build up on its delivery network and put up a tough competition to Amazon. The U.S. e-commerce giant has recently sent the market into a tizzy with its US$ 13.7Bn acquisition of Whole Foods.

The deal valuation is pegged at about US $250 million and Kroger, who already has a small stake in Ocado will pitch for gaining more 5% of the stake. The deal will allow Kroger to license Ocado’s robotics technology.

Deal to help U.S. Grocer establish significant Clout in Online Retail and Food Delivery

This is considered a bold move by Kroger, which puts it as a serious contender in online retail and grocery delivery segment in the industry. The investors of the Cincinnati-based company has firm faith in the merits of the pact as is being reflected by the rise in share price by 1.6% after the deal was announced.

On the other hand, players in the U.K. is globally known for pioneering the trend of massive adoption of online grocery shopping among customers. The partnership with the British online grocer will help Kroger to leverage on the former’s technologies, so crucial in food delivery segment in online retail.