Ocado is embarking on a new partnership in which it will supply its online shopping and delivery technology to Swedish retailer ICA.

FOOD & DRINK

Ocado signs new partnership with Sweden's ICA

2 May 2018 | by The Retail Bulletin

With around 1,300 stores across Sweden, ICA has a market share of around 36% and generated sales of SEK 106.5 billion in 2017.

The deal will see Ocado partner exclusively in Sweden with ICA to help the business launch an end-to-end solution for online grocery services. This will include front-end web site functionality supported by Ocado's proprietary 'web shop' and mobile grocery ordering applications, construction of Ocado's latest generation warehouse, and last-mile routing management technology.

In working with ICA, Ocado said it will be adapting its model to suit the needs of a different business model based on retailer-owned stores that will enable the independent retailers to continue to compete. The platform is expected to be implemented by the end of 2020.

Luke Jensen, chief executive of Ocado Solutions, said: "We are excited and proud to be partnering with another of Europe's leading grocery retailers. ICA has a strong track record of growth and innovation and our Smart Platform will give the ICA-retailers the opportunity to provide their customers with new levels of service, convenience and value. Our flexible, scalable and modular solution is uniquely positioned to address a fresh set of challenges and allow ICA deliver its ambitions for online."

ICA and Ocado will develop their first customer fulfilment centre as part of the partnership in the Stockholm area. The build is expected to take approximately three years. ICA will also move its store-pick based operations to the Ocado Smart Platform.  

In consideration of the investments made by Ocado, including maintenance and access to technology, ICA will pay Ocado certain upfront fees on signing the deal and during the development phase. Then there will be ongoing fees linked to both sales achieved and installed capacity within the customer fulfilment centre and service criteria.

Per Strömberg, chief executive of ICA Group, said: "We are now laying the foundation for the next generation ecommerce offering, and we are putting an important piece of the puzzle in place to realise our digital ambitions for all of ICA Group. Today we have the industry's most efficient processes for physical shopping, and through this agreement we can create the most efficient solutions also for ecommerce."

Ocado has also recently signed up France’s Groupe Casino and Canadian chain Sobeys.