(Dec 30): Ocado Group plc has ended exclusive arrangements to supply its automated grocery warehouse technology as investor pressure grows following setbacks to its partnership with Kroger Co in the US.
The UK company said its exclusivity terms in deals with supermarkets in the US and elsewhere have expired. The move means Ocado can sell more of its technology to other retailers around the world, according to a statement on Tuesday.
The shares reversed an earlier gain on Tuesday to fall as much as 2%. That means the stock has fallen 21% this year.
Ocado, which also has a grocery delivery joint venture with Marks & Spencer Group plc, has been under pressure to show that its capital-intensive technology is worth the investment.
Ocado’s partnership with Kroger, which began in 2018, has been key to its sales pitch, but the rollout of its automated warehouse network has fallen short of financial expectations, resulting in the closing of some sites. The US supermarket operator has also expanded its business with fast delivery firms Instacart, DoorDash and Uber Eats, which the company said will help it reach more consumers and offer faster delivery options.
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The UK company had said this summer that it expected to end the exclusivity terms in many of its supply deals by the end of the year.
Ocado expects to start new deals in many international grocery markets. Last month the company said it still sees significant growth in the US market, even as it announced the Kroger warehouse closings.
Ocado’s other grocery partners include Aeon of Japan, France’s Casino and Coles in Australia. Ocado’s client in Canada, Sobeys, halted the planned launch of its automated warehouse in Vancouver last year, and both companies ended their exclusivity agreement at that time.
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