The recent Ocado-Kroger deal resulted in a 44% increase in Ocado shares. The US retail giant Kroger, struck a deal with the UK company Ocado. The deal is for the British company’s technology to be used exclusively in the USA by Kroger. The latter, which has annual sales of $122 billion (£90 billion), is one of the largest grocery chains in the world. Ocado is a British online supermarket with cutting-edge automated warehousing a past six months. However, it is the first such deal made with a US firm. This technology automates order picking for groceries ordered online.
That is not the only difference with this deal. Ocado came to an agreement with Canadian company Sobeys and with Group Casino of France to construct one automated robotic warehouse for each of them. However the Ocado-Kroger deal involves between three and twenty such warehouses. The twenty planned for the first three years of the agreement.
Ocado – Kroger Deal Exclusive
This is an exclusive deal between Ocado and Kroger.n The UK firm is no longer seeking out other US companies to deal with. Any talks in progress with other US companies will be terminated. Over the past year, Ocado has come to a deal with the leading Swedish grocery retailer ICA. This firm has a Swedish market share of around 36% from its approximately 1300 stores. Kroger also runs the Morrisons online business, the UK’s fourth largest supermarket.
Logistics Technology Ocado Main Business
Although Ocado is known in the UK as being an online grocery firm, its main business is in logistics technology. The company can make more by licensing its logistics services out than it can from its grocery business. Due to the Ocado – Kroger deal, Ocado shares rose from 552p to 995p at one point today and ended 44.38% up at 797p
The Ocado-Kroger deal seems to be the last between Ocado and a US company. However, Ocado will likely continue to develop its robotics systems with a view to further licensing agreements outside of the UK. Should the company come up with something new, then perhaps the Ocado Kroger deal will not be its last deal with an American company.