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UK-based Online grocer Ocado has announced its fifth international deal, with US grocery retailer Kroger. Under the terms of the agreement, Ocado's technology will be used in the US exclusively by Kroger, with the US firm also increasing its investment in the company by five percent. This will bring its investment in Ocado to more than six percent. 

Identifying up to 20 sites for development

The deal gives Kroger the rights to use Ocado’s technology for grocery and other food distribution related activities in the US on an exclusive basis. In exchange, Kroger will pay monthly exclusivity and consultancy fees which will offset in part the total fees that are expected to be agreed between the two parties. The two companies are currently working to identify the first three sites in 2018 for the development of new, automated warehouse facilities, while up to a total of 20 sites will be identified over the first three years of the agreement. This highlights the scale of the deal for both companies. 

Ocado’s chief executive, Tim Steiner, said: “The opportunity to partner with Kroger to transform the way in which US customers buy grocery represents a huge opportunity to redefine the grocery experience of Kroger’s customers and create value for the stakeholders of both Kroger and Ocado.”

Shifting focus to delivery options in the US

The agreement comes as retailers continue to scale up in the channel. While store pickup options have been a major focus for US retailers, including Kroger, the focus this year has shifted to home delivery. Several retailers have signed agreements with the on-demand delivery platform, Instacart, to build a presence in the channel. Over the last year, these include Costco, Sam's Club, Wegmans and Publix. This year, Walmart has also started to roll-out home delivery in partnership with several companies to 100 metro areas, Amazon is expanding its Prime Now service at Whole Foods Market, while Target is optimising its acquisition of Shipt last year to roll-out same-day delivery.

Kroger digital sales up 90% last year

Kroger has also been partnering with Instacart and other on-demand services for home delivery, with the service available in just under 900 locations. Along with its store pickup model, ClickList, this helped the retailer to grow its digital sales more than 90% during its 2017 financial year. This year, it plans to add around 500 additional stores offering the ClickList service. The future of its existing delivery partnerships remains unclear, although they are likely to be in place for some time as it will take several years for the partnership with Ocado to scale up.

Ocado’s growing number of international partners

The deal with Kroger is the latest in a number of tie-ups announced by Ocado in recent months. Earlier this month, it announced a deal to support Swedish supermarket ICA’s online grocery business, following deals with Canada-based Sobeys and France-based Casino. The retailer also announced an agreement with an unnamed partner last June, making Kroger its fifth international partner.

This latest deal for Ocado means that is has entry into the world’s biggest market, and its role as a provider of retail technology is continuing to gain momentum.

IBM has announced a major Blockchain collaboration with several retail and FMCG businesses. The group includes Dole, Driscoll’s, Golden State Foods, Kroger, McCormick and Company, McLane Company, Nestlé, Tyson Foods, Unilever and Walmart. The businesses will work with IBM to explore how Blockchain can be used to benefit the global supply chain.

Improving food safety

One of the primary aims of the collaboration is to improve food safety by increasing the ability of businesses to quickly identify and trace goods as they move through supply chains. Blockchain provides users with permission with a view of transactions and information relating to a specific product, crop or commodity. This makes it relatively simple to retrieve information on the source of a product, a production batch number or product’s state at specific locations. What makes Blockchain so powerful is its security. Due to the way in which a Blockchain is constructed, the information stored within It cannot be fraudulently adjusted.

A single view of the truth

Marie Wieck, general manager, IBM Blockchain. Said “Unlike any technology before it, Blockchain is transforming the way like-minded organisations come together and enabling a new level of trust based on a single view of the truth. Our work with organisations across the food ecosystem, as well as IBM’s new platform, will further unleash the vast potential of this exciting technology, making it faster for organizations of all sizes and in all industries to move from concept to production to improve the way business gets done.”

Want to see more on how Blockchain is set to revolutionise supply chain operations? Take a look at how Walmart trialled the technology in its pork and mango supply chains.

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As part of its new 'Sustainability Lives Here' campaign and the latest development of its 2020 Sustainability Goals project, Kroger is offering customers digital coupons targeted towards sustainable products.

New website to support the program and broader sustainability initiatives

The digital coupons are being made available at a new website to support the programme, They are targeted towards certified products such as Fair Trade, Rainforest Alliance, Forest Stewardship Council, along with organic and natural products across its departments. The website also provides customers with an in-depth look at the retailer's sustainable supply chain initiatives and recipe ideas based on environmentally friendly products. It also provides customers with ideas around reducing food waste and eating well.

Aligns with Kroger's corporate sustainability focus

The campaign is being launched to coincide with Earth Month, and aligns with Kroger's corporate sustainability focus, 2020 Sustainability Goals. This includes a goal of zero waste designation by 2020. The retailer is also running a number of programs to optimise private brand packaging and improve transport efficiency by 20% by 2020. This initiative will help Kroger to raise awareness of its sustainability-focused products and enhancing its credentials in this area.


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