Online supermarket Ocado’s shares are up 20 percent this morning following the news of its international partnership agreement with Groupe Casino.
Ocado will be supplying the French supermarket chain with its technology, the Ocado Smart Platform. This includes the company’s delivery management software, online interface and automated warehouses. Ocado says this will “create significant long-term value for the business.”
Ocado shares surged to 306.10 this morning after the announcement.
This deal has been a long time coming for Ocado. Back in 2015, co-founder and chief executive Tim Steiner said a deal with Casino would be signed before the end of the year. However, it has taken nearly two years to have the full deal established.
Speaking of today’s announcement, Steiner said:
“We believe that the scaleable, modular end-to-end solutions provided by the Ocado Smart Platform, will allow retailers such as Groupe Casino to build their online grocery offer in a way that is profitable and sustainable, creating value for customers, suppliers and shareholders.”
Steiner also that Ocado will continue to pursue other collaborations with retailers all over the world.
What is the Ocado Groupe Casino deal?
Groupe Casino is going to pay UK retailer upfront fees of signing and during the development phase of the implementation of the Ocado Smart Platform. Afterwards, it will pay ongoing fees for the use of the technology.
Ocado says the deal will have a minor impact on its 2017 earnings, however in 2019 and beyond it hopes the profitability of Ocado Solutions will grow.
The agreement has plans for the development of a Customer Fulfillment Centre (CFC) using the smart platform. The first centre will serve the Greater Paris area, as well as the Normandie and Hauts de France Regions.
Depending on the success of the plans, other CFCs will be established in other large urban areas in France.
If Ocado wants to continue its international expansion, then Groupe Casino is a good place to start. As well as having supermarkets all over the France, the grocery chain also has operations in nine other countries. These include countries such as Argentina, Brazil, and Uruguay.