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Ocado partners with Canada's Sobeys

Ocado partners with Canada's Sobeys

Sobeys has announced today it plans to launch an online grocery store for Canadians, by partnering up with British firm Ocado, known for its automated grocery warehouse technology.

Ocado's worldwide deals are turning out to be a bit like buses.

It said Sobeys and Ocado will develop their first Customer Fulfilment Centre (CFC) in the Greater Toronto Area, the build of which is expected to take approximately two years. Sobeys and Ocado also will partner to incorporate ongoing learning and innovation from Ocado's global experience into the Canadian business.

Ocado Chief Executive Tim Steiner commented: "We are delighted to be working with one of the leaders in North American grocery retailing".

Investors leapt on to the bandwagon after news of the tie-up, buying up Ocado shares and lifting the price by 113½p, more than 27 per cent, to 526½p.

The latest deal is a third worldwide partnership for Ocado's Smart Platform following on from late November's announcement of an agreement with France's Groupe Casino and the first deal revealed with an unnamed partner last June.

"Soon Sobeys, along with Ocado, Morrisons and Groupe Casino, will be powered by Ocado Smart Platform, sharing a common goal of harnessing the best technology for grocery e-commerce to win in their markets".

"We look forward to welcoming more major grocers to this list going forward".

Ocado said it expects the deal to add "significant long-term value to the business", though it will be earnings-neutral for the current financial year.

Sobeys is set to hand Ocado upfront fees to fund the project's development, though these fees will be offset by the initial integration of the software and establishment of the partnership.

It then expects capital expenditure of £15m in the 2018 financial year to support the development of its platform.

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