Ocado has signed a deal to provide Australian grocery chain Coles with its Smart Platform.
The partnership will go live in four years’ time when two Ocado fulfilment centres go live in Sydney and Melbourne. The agreement is exclusive in Australia.
Ocado expects the deal to create “significant long-term value” although it will make a negative short-term impact in the current financial year as no fees will be recognised until the CFCs are complete. Investment will mainly be focused in the 18 months prior to the opening of the centres.
Ocado has signed multiple international deals with overseas retailers over the past year, with each agreeing to use its solutions business to power their online grocery offer.
As with its other partnerships, the pair will incorporate “ongoing learning and innovation” from Ocado’s global experience into the Australian marketplace.
Coles, which operates 818 supermarkets, 911 off-licences and 712 petrol stations, makes £22bn in sales per year. It has a £540m online sales business.
Ocado chief executive Tim Steiner deemed the deal “another big moment in the continuing transformation of Ocado”.
‘One of the biggest and most successful retailers in Australia’
Ocado chief financial officer Duncan Tatton-Brown described Coles as the “one of the biggest and most successful retailers in Australia”, and said the deal would allow for both businesses to grow.
“Coles is one of the biggest and most successful retailers in Australia. We think we’re backing the winners in the market and those winners are going to get a good share of the market. As long as that happens, we’re happy to be in a partnership with them.”
Tatton-Brown also said that announcing the deal - the first struck since the fire which gutted Ocado’s Andover CFC in February - gave evidence to the media and the wider market that there won’t be any “lasting consequences” to the business from the blaze.
“For us, the importance of the deal is just that: another deal with a new customer, in a new territory. Of course, it’s not unhelpful to announce a new deal after the fire because it’s evidence of what we always knew: that there were no lasting consequences of the Andover fire. It’s helpful in answering those questions, but it’s not changed our view.”