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Kroger, Ocado set terms for e-commerce partnership

Automated warehouses to help drive Kroger’s online grocery operations

Russell Redman

October 31, 2018

2 Min Read
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The Kroger Co. and Ocado Group have signed a service and operational pact in connection with their partnership to build U.S. automated warehouse facilities for Kroger’s online grocery business.

U.K.-based Ocado said Tuesday that, under the terms of the deal, Kroger plans to order three customer fulfillment centers (CFCs) by the end of 2018 and 20 CFCs during the first three years of the agreement.

Kroger is expected to announce the locations of the first three CFCs in the next several weeks.

“This is a significant step toward both solidifying our partnership with Ocado and redefining the Kroger customer experience,” Alex Tosolini, senior vice president of business development at Cincinnati-based Kroger, said in a statement. “The alliance will bring to the U.S. Ocado's unparalleled innovation and technologies. This is exciting news and will help accelerate our vision to serve America through food inspiration and uplift.”

Ocado has agreed to deploy and maintain modules of mechanical handling equipment to provide a certain level of throughput. The company said the goal is for Kroger's CFCs to be up and running within about two years of each order being placed.

The terms and fee structure of the service and operational agreement combine upfront fees and ongoing capacity fees, according to Ocado, which pegged the cost for the first three CFCs at about £90 million.

Related:Kroger allies with UK online grocer Ocado

“We are delighted to have signed this services agreement with Kroger, which sets out the key parameters for our working relationship going forward. The Kroger and Ocado teams have been working hard for some time to prepare for the opening of the first CFCs in the United States,” said Luke Jensen, CEO of Ocado Solutions. “We are very excited at the prospect of helping Kroger bring new services and value to its customers and transform the food retail market in the U.S.”

Through the partnership, leading British online grocer Ocado is slated to augment Kroger's digital and robotics capabilities and extend its omnichannel reach to provide “every family in America with the convenience of shopping for anything, anytime and anywhere.”

When the alliance was first announced in May, Kroger Chief Financial Officer Michael Schlotman noted that the deal gives Kroger a broad e-commerce solution exclusive to the company in the U.S. The Ocado Smart Platform offers capabilities in online ordering, automated fulfillment and home delivery. 

Also with the partnership, Kroger raised its investment in Ocado by 5% through a subscription rights agreement, bringing its stake in the U.K. company to more than 6%.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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