Ocado Teams Up With Kroger: What The Analysts Said

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U.S. retailer Kroger has signed a landmark deal with Ocado to use its technology for grocery deliveries, marking the British online grocer's first entry into the United States.

The deal boosts Kroger's stake in Ocado, whose shares popped more than 50 percent in premarket trading, by 5 percent to 6 percent.

The opportunity to partner with Kroger to transform the way in which USA customers buy grocery represents a huge opportunity to redefine the grocery experience of Kroger's customers and create value for the stakeholders of both Kroger and Ocado. "Our partnership with Ocado will speed up our efforts to redefine the food and grocery customer experience - creating value for customers and shareholders alike". It started distributing groceries for Waitrose and floated in 2010.

Online supermarket chain Ocado has signed a deal with USA supermarket chain Kroger.

Currently, the two companies are looking for suitable locations to establish three automated warehouse facilities.

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Ocado Group PLC, which runs online delivery services and makes related software, said Thursday it's signed a partnership agreement with supermarket chain The Kroger Co.

Ocado CEO Tim Steiner said he expected the "transformative relationship" to reshape the food retailing industry in the United States. Ocado added that, in the event of a failure to commit to the target capacity, Kroger will pay compensation to Ocado.

The threat of a big disruptor entering the sector has put pressure on food retailers to be on top of their game when it comes to online deliveries, and that's playing into the hands of Ocado, with a number of deals in the pipeline now coming to fruition.

It has also inked a deal with a yet-to-be named European retailer.

The positive share price reaction is as much a factor of Kroger's U.S. grocery market dominance, as being hot on the heels (and after a great deal of waiting) of similar deals in Sweden (ICA, 2 May 18), Canada (Sobeys, 22 Jan 18) and France (Casino, 28 Nov 17).

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