Kroger, which operates nearly 2,800 grocery stores in the United States, is set to become a major player in e-commerce and grocery delivery.
The massive retailer, based in Cincinnati, Ohio, acquired a 5-percent stake in e-commerce grocery and delivery giant Ocado. Kroger plans to bring the United Kingdom company’s novel technology to the United States.
Kroger will likely boost delivery of online sales of fresh and frozen seafood. Fresh Atlantic salmon and raw farmed white shrimp are examples of its current online offerings.
Ocado’s unique software and hardware automates the processing and packing of online groceries, using hundreds of robots rather than people to pull together orders quickly in fulfillment centers, according to Reuters.
“I consider Ocado to be best in breed in terms of their automated fulfillment (Customer Fulfillment Centers) and creating customer-friendly interfaces to facilitate efficient ordering. This has led to what is arguably one of the few e-commerce grocery businesses that is actually profitable,” wrote Neil Stern, strategic planning specialist at McMillanDoolittle, in Forbes.
Ocado’s turnover was BP 1.5 billion (USD 2 billion, EUR 1.7 billion), while EBITDA profit was BP 86 million (USD 116 million, EUR 98 million) in 2017, according to Stern.
Ocado also has partnerships with Morrisons, Grupe Casino and Sobeys. However, Kroger operates on a much larger scale, with sales of USD 122 billion (EUR 104 billion) in its most recent fiscal year.
“The scale of the proposed transaction, and therefore the quantum of its economics, is wholly different to those we’ve already signed,” said Ocado’s Chief Financial Officer Duncan Tatton-Brown, according to Reuters.
In fact, Ocado will end discussions with other U.S.-based retailers, according to Tatton-Brown. “The opportunity for a business like Kroger is huge, and I think we have the best potential partner in the United States,” he said. “They are ambitious, they are capable and together we hope they can transform their industry.”
