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Ocado Group’s relationship with Kroger has taken another hit after the US’s largest supermarket chain said it would not go ahead with a planned automated distribution centre run on the UK group’s technology.
The London-listed group, which provides automated technology for distribution centres as well as running its own grocery business, said on Friday that Kroger would scrap its Charlotte, North Carolina, distribution site ahead of an opening next year — one of two that Ocado is contracted to deliver.
Kroger last month scaled back the high-profile deal, which was intended to showcase the potential of the UK group’s cutting-edge technology, by closing three of the eight automated warehouses that use Ocado’s technology.
Kroger said it would monitor the performance of the remaining ones.
Ocado said it would receive a one-off payment of $350mn in compensation for the closed centres, up from last month’s estimate of $250mn.
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Ocado and Kroger’s original plan in 2018 anticipated they would develop 20 automated distribution centres over the course of three years.
But Ocado’s facilities require extensive upfront investment and need to be operating at close to capacity to deliver a return on that outlay, owing to the high cost of storing perishable goods.
