Ocado Optimistic on US Growth Despite Kroger Hurdle

• Ocado's exclusivity agreement with Kroger ended recently, allowing the company to pursue conversations with other U.S. retailers, which CEO describes as 'positive' in early stages
• Potential new U.S. clients are 'most excited' about Ocado's store-based automation technology rather than traditional standalone automated warehouses, with testing planned before material roll-out in a year
• Three new customer fulfillment centers are scheduled to go live in 2025 (Busan, Tokyo, Phoenix) with additional openings planned for 2027-2028 in Barcelona, Tokyo, and Seoul

Ocado Optimistic on US Growth Despite Kroger Hurdle

British online grocery technology firm Ocado remains confident about securing new U.S. partnerships despite setback from key partner Kroger, which closed three robotic distribution centers last year. The closures raised questions about Ocado's business model viability, particularly in less densely populated areas.

Key Developments:

CEO Tim Steiner told Reuters he sees "enormous opportunity" in the U.S. market following the end of Ocado's exclusivity agreement with Kroger at year-end. The company has begun early conversations with potential retailers, which Steiner described as "positive."

Strategic Shift:

Potential U.S. clients are showing greatest interest in Ocado's new store-based automation technology rather than traditional standalone automated warehouses (customer fulfillment centers/CFCs). The company plans to test store-based automation at select U.S. locations before a significant rollout in approximately one year.

Expansion Pipeline:

Despite the Kroger setback, Ocado continues its global CFC expansion:

• 2025: Three openings planned in Busan, South Korea (partner: Lotte Shopping), Tokyo (partner: Aeon), and Phoenix (partner: Kroger)
• 2027-2028: Three additional facilities slated for Barcelona (partner: Bon Preu), Tokyo, and Seoul

Corporate Actions:

The company announced 1,000 layoffs alongside its outlook, though specific financial figures were not detailed in the report.

Market Implications:

Ocado's pivot toward store-based automation suggests adaptation to market realities where its large-scale warehouse model faces challenges. Success in securing new U.S. partnerships will be critical for validating its technology platform beyond the Kroger relationship.