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Online grocer Ocado dismisses Amazon as a ‘very small competitor’ ahead of first Kroger warehouse launch

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By Rupert Steiner

Kroger /zigman2/quotes/206215053/composite KR -1.94% partner Ocado has dismissed the threat of Amazon /zigman2/quotes/210331248/composite AMZN -1.53% just weeks before the owner of Ralphs, Dillons and Gerbes opens its first automated warehouse in Greater Cincinnati, Ohio, which could transform online grocery in the U.S .

The largest supermarket retailer in the U.S. has teamed up with Ocado /zigman2/quotes/207225647/delayed UK:OCDO -3.23% , a U.K. based robotics and software company, to open a series of high-tech sheds or customer fulfillment centers (CFCs), which use artificial intelligence and machines to automate grocery delivery.

Read: Amazon-Killer Ocado Needs to Execute

Ocado Chief Executive Tim Steiner used a trading update to dismiss online retailer Amazon as a “very small competitor” in the grocery market, saying its home delivery offering was almost at an “unnoticeable level.”

Amazon has opened its second supermarket in the U.K. this week, with a store that operates without cash registers.

“It doesn’t mean it’s not clever tech, but it won’t have a big impact on the [grocery] market,” Steiner was reported as saying about the stores in the Daily Telegraph .

Read: Ocado Success Brings the Fight to Amazon in U.K.’s Online Grocery Battle

On Wednesday next week, Kroger will preview the country’s first CFC powered by Ocado, ahead of its official opening in early April in Greater Cincinnati, as well as giving data on the latest e-commerce trends and the future of food.

Set up by former Goldman Sachs /zigman2/quotes/209237603/composite GS -1.44% bankers in 2000, Ocado pioneered its web-only delivery service by selling the high-end food of partner Waitrose . It has now switched to retailer Marks & Spencer /zigman2/quotes/206225481/delayed UK:MKS +2.03% in the U.K., plus its own Ocado-branded items.

The service was an instant hit with consumers, and quickly helped Ocado morph from internet food merchant into technology company, as other grocers sought to license its pioneering robotics.

Read: Kroger Partner Ocado Sees Surging Demand, Sending the U.K. Online Grocer’s Stock to All-Time Highs

At Ocado’s state-of-the art warehouse, in Hatfield, an hour north of London, a worker, dwarfed by aisles of boxes that stretch as far as the eye can see, stands at a packing station. Contents come to the packer via robots and conveyor belts. The worker selects items from them until the order is completed.

The potential economies of this system are big, given that most supermarkets fill online orders by sending workers around stores with a shopping cart and grocery list. There are few errors and substitutions at Ocado because it only allows shoppers to pick from a list of available items it knows it has ordered on the day of delivery. It even uses AI to pick transport routes, ensuring that delivery deadlines rarely are missed.

Read: Kroger Partner Ocado Raises $1.3 Billion to Accelerate Postcoronavirus Growth

In a trading statement issued on Thursday for the 13 weeks to February 28, 2021 Ocado’s retail revenue grew 40%, reflecting strong demand for online grocery.

Steiner said in a statement: “Over the last 12 months, there has been a dramatic and permanent shift towards online grocery shopping around the world. Millions of customers have experienced online grocery shopping through the pandemic and many of them will not be going back to bricks and mortar.”

Ocado’s software and technology is being rolling out across the world. The first international partners to go live, Sobeys and Groupe Casino, reported an encouraging customer response, and Steiner said: “We look forward to the official opening of the first Customer Fulfillment Centers for our U.S. partner Kroger in the coming weeks.”

/zigman2/quotes/206215053/composite
US : U.S.: NYSE
$ 41.53
-0.82 -1.94%
Volume: 13.10M
Nov. 30, 2021 4:00p
P/E Ratio
27.64
Dividend Yield
2.02%
Market Cap
$31.49 billion
Rev. per Employee
$284,942
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,507.07
-54.50 -1.53%
Volume: 4.00M
Nov. 30, 2021 4:00p
P/E Ratio
68.58
Dividend Yield
N/A
Market Cap
$1806.24 billion
Rev. per Employee
$297,430
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/zigman2/quotes/207225647/delayed
UK : U.K.: London
1,737.50 p
-58.00 -3.23%
Volume: 443,521
Dec. 1, 2021 12:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
£13.59 billion
Rev. per Employee
£125,244
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/zigman2/quotes/209237603/composite
US : U.S.: NYSE
$ 378.99
-5.55 -1.44%
Volume: 4.57M
Nov. 30, 2021 4:00p
P/E Ratio
6.25
Dividend Yield
2.11%
Market Cap
$129.41 billion
Rev. per Employee
$1.31M
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/zigman2/quotes/206225481/delayed
UK : U.K.: London
241.00 p
+4.80 +2.03%
Volume: 1.63M
Dec. 1, 2021 12:00p
P/E Ratio
189.76
Dividend Yield
0.00%
Market Cap
£4.71 billion
Rev. per Employee
£131,430
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