Ocado upbeat on US prospects despite Kroger setback

Ocado Targets New U.S. Deals After Kroger Closures, End of Exclusivity

By James Davey

LONDON, Feb 26 (Reuters) - British technology and online grocery group Ocado is confident it can secure new U.S. deals even after key partner Kroger moved last year to close three of its robotic distribution centres, Ocado CEO Tim Steiner said on Thursday.

U.S. Outlook and Strategy

Kroger's decision raised fresh questions over the viability of Ocado's business model, particularly for partners whose customers are spread beyond dense urban areas.

End of Kroger Exclusivity

However, Steiner said he saw "an enormous opportunity" in the United States after Ocado's exclusivity agreement with Kroger ended.

Shares and Layoffs Reaction

"We are confident," he told Reuters after Ocado published annual results and announced 1,000 layoffs, sending its shares 7% lower on the day and extending a year-on-year slump to 34%.

EARLY CONVERSATIONS 'POSITIVE'

Positive Early Retailer Talks

"We've only been allowed to talk to those retailers now since the end of the year, but the early conversations are positive," he said.

Focus on Store-Based Automation

Steiner said potential new clients were "most excited" about Ocado's new store-based automation technology rather than its traditional standalone automated warehouses, or customer fulfilment centres (CFCs) as it calls them.

Pilots at Select U.S. Stores

"We have the most advanced product development in this space," he said. Ocado was looking to test the store-based automation at a small number of U.S. sites before a material roll-out in a year's time.

CFC Openings in 2026

Ocado is still opening new CFCs. Three are due to go live this year in Busan, South Korea with partner Lotte Shopping, in Tokyo with Aeon, and in Phoenix with Kroger.

Sites Slated for 2027–2028

Three openings for 2027 and 2028 are slated in Barcelona with Bon Preu, in Tokyo, and Seoul.        

(Reporting by James Davey, editing by Andrei Khalip)