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Ocado partners with U.S. retail giant Kroger

18 May 2018

Kroger, which is increasing its stake in Ocado to a total of more than 6%, hailed the Ocado deal as "innovative, exciting and transformative". It comprises access to Ocado's physical infrastructure solutions to run efficient warehouse operations for the single pick of products, together with the end-to-end proprietary software applications required to operate an online grocery business from user interfaces, through warehouse operating and control systems, to logistics, route planning and optimization.

Kroger is no stranger to utilizing United Kingdom technology to drive their business because it had a long term partnership with Tesco and Dunnhumby around loyalty programs.

The two companies are now working to identify the first three sites to develop new automated warehouse facilities in the US.

Some analysts and grocers have questioned how well the Ocado model is suited to the USA market given its much more disperse population compared to densely populated Britain.

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Americans, take note: British robots are coming to pack your grocery orders.

Instacart now delivers groceries for Kroger stores in 45 USA markets, including Ralphs in Southern California, Mariano's in Chicago and King Soopers in Denver.

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.

The partnership not only brings Ocado's technology to the US but also provides a broad e-commerce solution that is exclusive to Kroger here, according to Mike Schlotman, executive vice president and chief financial officer at Kroger.

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Kroger operates almost 2,800 stores in 35 USA states and has a turnover of more than $115 billion (£85 bn). It also said it planned to offer curbside pickup from roughly 1,600 stores this year.

Ocado has already partnered with Groupe Casino, Sobeys Inc. and ICA Group.

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

OCDGF stock was up 39% and KR stock was up 2% as of Thursday morning.

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Bearish hedgies ate humble pie, with those shorting Ocado registering as much as a £282m paper loss at one point in the day, before shares eased back.

Ocado partners with U.S. retail giant Kroger