Kroger inks 'transformative partnership' with online grocer Ocado

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Kroger inks 'transformative partnership' with online grocer Ocado

By Antoinette Alexander - 05/17/2018
CINCINNATI — Kroger is furthering its mission to redefine the food and grocery customer experience by inking an exclusive partnership with U.K.-based online supermarket Ocado.

The alliance will bring to the United States for the first time the technology underpinnings of the Ocado Smart Platform, which includes online ordering, automated fulfillment and home delivery capabilities.

As part of the agreement, Kroger will increase its existing investment in Ocado by five percent in a subscription rights agreement. This will bring the company's total investment to more than six percent. Ocado will partner exclusively with Kroger in the United States, enhancing Kroger's digital and robotics capabilities and helping expand its coverage area with the convenience of shopping for anything, anytime and anywhere.

Kroger and Ocado are already working to identify the first three sites in 2018 for development of new, automated warehouse facilities in the United States, and will identify up to a total of 20 over the first three years of the agreement.

Kroger stated that the relationship is not expected to impact its earnings per diluted share guidance range for 2018 and 2019, as it is already reflected in its Restock Kroger plan.

"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," said Rodney McMullen, Kroger's chairman and CEO. "We are actively creating a seamless digital experience for our customers. Our partnership with Ocado will speed up our efforts to redefine the food and grocery customer experience — creating value for customers and shareholders alike."

The Restock Kroger plan, which was unveiled in October, consists of four main drivers:

  • Redefine the food and grocery customer experience

  • Expand partnerships to create customer value

  • Develop talent

  • Live Kroger’s purpose

The Restock Kroger plan is expected to generate $400 million in incremental operating margin by 2020. The retailer also expects to generate more than $4 billion of free cash flow over the next three years — nearly double what was generated over the previous three years.

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