Kroger recruits UK firm in online fight

Jun 18, 2018 | Emerging business models | 0 comments

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Amazon’s roll-out of online shopping and subscriptions services as well as it’s purchase of Whole Foods has struck fear into many traditional bricks and mortar supermarket chains. US retailers are now scrambling to offer online services to combat the existential threat Amazon poses, as well as deliver on customers’ changing demands.

In the case of US retailer Kroger, UK first-mover Ocado has been enlisted to give the chain an online shopping edge. The UK-based company started out as an online grocery store around 2000 when online shopping was still in its infancy. It has since developed into an online delivery partner – firstly for high-end UK grocery chain Waitrose.

Over time Ocado has focussed on developing technologies, integrating its processes into automated warehouses and the apps it designs for retailer partners. The company has invested in robotics, machine-based learning techniques and 4G-based communications technology which allows robots to communicate with each other at high speed.

Ocado has worked with German, Italian, Austrian and Swiss scientists to develop robot hands that can pick apples without damaging them in a new proprietary computer vision system that allows robots to grasp an item without the need for a 3D model of it. Its automated warehouses are unique end-to-end solutions for online retailers, based on its own proprietary technology.

Ocado has only recently started working with retailers outside the UK. Last year, it signed a deal with Casino which operates French supermarket chain Monoprix. At the start of the year a deal was signed with Canadian supermarket chain Sobeys, Swedish ICA and now Kroger has enlisted Ocado’s specialised fulfillment and delivery services.

The Kroger deal is Ocada’s biggest deal yet and following the announcement, Ocado has discontinued discussions with other US-based retailers. Kroger will build 20 Ocado-warehouses over three years and should they fail, Ocado gets compensated. The exclusivity of the deal is also contingent on Kroger ordering enough of Ocado’s fulfillment centers.

Ocado CEO Tim Steiner said his company is preparing for a transformative relationship that will “reshape the food retailing industry in the US in the years to come”. Watch out Amazon, Kroger’s coming to get you.

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