Ocado Group to partner with Auchan Retail to develop online business in Spain

Ocado Group plc

Ocado Group plc (LON:OCDO) has announce the signing of an agreement between Ocado Group and Auchan Retail to partner with Ocado Solutions Limited to develop Alcampo’s online business in Spain using the Ocado Smart Platform.

Auchan Retail is one of the world’s largest and best known grocery retailers, with 180,000 employees, €32bn revenue, and operations across 13 countries. In Spain, they operate the Alcampo brand via a network of 310 stores (62 hypermarkets, and 248 supermarkets and convenience stores, of which 135 are franchises), with revenue totalling €4.5bn in 2020.

In Spain, as in all major markets, there has been a significant acceleration in grocery ecommerce, with demand surging over the past 18 months as more consumers have turned to the online channel to deliver vital services during periods of rolling lockdowns and restrictions.

As Spanish customers continue to shift more of their spend online, the demand for competitively priced, high quality grocery ecommerce will continue to grow. This partnership will enable Alcampo to deliver a world-leading experience online to grocery customers across Spain.

Under this agreement, Ocado and Alcampo will initially build a Customer Fulfilment Centre (CFC) to serve the Madrid region from 2024, with additional CFCs to be announced at future dates. Alcampo will also leverage Ocado’s In-Store Fulfilment (ISF) software across its hypermarkets nationwide to enable more efficient picking from stores. The agreement will cover both Alcampo’s food and non-food business.

Alongside physical fulfilment solutions, Ocado will also provide Alcampo with OSP’s end-to-end software platform and a comprehensive suite of engineering and support services to ensure the smooth launch and ongoing development of its ecommerce operations.

The structure of fees agreed with Alcampo are similar to those agreed with other international Ocado Solutions partners. Alcampo will pay Ocado certain fees upfront and during the development phase, then ongoing fees linked to both sales achieved and installed capacity within the CFC and service criteria.

Ocado and Auchan Retail will also explore the potential to extend this partnership into other geographies.

Tim Steiner, CEO of Ocado Group, said:

“I’m delighted to welcome Auchan Retail to the innovative and forward-looking group of food

retailers around the world who will be powering their ecommerce operations with the Ocado Smart Platform.

The appetite for our unique end-to-end platform remains strong as retailers look to take advantage of the channel shift which is now redrawing the landscape of the global grocery market.

Our partnership with Alcampo will bring the very best online grocery experience to customers in another major retail market, with proven and sustainable economics. We look forward to helping Alcampo change the way customers shop in Spain, for good”.

Luke Jensen, CEO of Ocado Solutions, said:

“Auchan Retail is one of the world’s leading grocery retailers, with strong brands and deep connections to customers across multiple global markets.

Spain is primed for significant growth in online grocery sales in the coming years, and as we are proving with partners across international markets who we have successfully helped go-live, Ocado’s technology enables a genuinely world-leading customer proposition online at a time when more shoppers are coming to the channel than ever. We can’t wait to bring this offer to Alcampo, and enable them to become a market leader online in Spain”

Edgard Bonte, President of Auchan Retail, said:

“Food e-commerce and the acceleration towards an omnichannel offer are a priority for all our brands. This partnership in Spain with Ocado illustrates our desire to be the leader in phygital food retail in this country in the near future. I am confident in our ability to make it happen, with the help of Ocado’s technology”

Américo Ribeiro, CEO of Alcampo, said:

“This partnership aims to accelerate the company project that is committed to the good, the healthy and the local. This objective is based on the strength of the people who are part of the company and on the potential of the stores in each of the territories in which we are present. The alliance with Ocado, a technological leader, marks a turning point in the development of our phygital commerce, also contributing to continuous learning and innovation, cornerstones for the creation of sustainable value”.

Expected financial impact for Ocado Group

Ocado expects this deal to create significant long term value to the business. The impact of this transaction should be negligible on earnings in the current financial year as no cash fees will be recognised in revenue until operations commence. Ocado expects minimal additional capex in FY21 with the majority of additional capex in the 18 months prior to the opening of the CFC.

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