Ocado strikes factory deal with Australian grocer Coles a month after £1.5bn Marks & Spencer tie-up
Ocado has agreed a deal to provide two robot-operated fulfillment centres for Australian grocer Coles Online, as it doubles down on its growing role as a retail technology supplier.
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The online supermarket will build and operate the customer fulfillment centres in Sydney and Melbourne, with both expected to go live within four years.
The deal sent Ocado's shares up four per cent to 1,306.5p in early morning trading.
It is the fifth such deal Ocado has struck in the last 18 months as it pivots from its role as a food delivery firm in its own right to supply other supermarkets with its proprietary technology.
“Today marks another big moment in the continuing transformation of Ocado, said Ocado boss Tim Steiner.
“Our unique, proprietary and industry-leading technology is bringing new growth opportunities to retailers around the world and changing the customer experience of grocery shopping.
“Coles is a grocer with a global reputation for innovation and outstanding commitment to their customers, and I am delighted we will be working together in the years to come to reshape the food retail landscape in Australia.”
Coles, which makes over AU $1bn (£540m) in annual sales, hopes to use Ocado’s factories to serve customers in Australia’s cities and urban areas.
The value of the tie-up was not revealed, though Coles will pay upfront signing fees as well as developmental fees, before ongoing payments linked to the sales it achieves and the factories’ installed capacities.
Coles chief executive Steven Cain said: “Ocado’s ongoing investment and retail partnerships around the world will help us continue to improve our offer into the future.”
Ocado expects the deal to result in significant long-term value, despite making a loss on the agreement this financial year before operations start.
Read more: Investors hit M&S stock as it agrees Ocado food delivery venture
The deal follows Ocado’s £1.5bn joint venture with Marks & Spencer, which will see the British brand take food shopping online for the first time.