Ocado secures partnership deal with Australia’s Coles

Online grocer Ocado has landed its fifth major overseas deal in less than 18 months after signing a technology partnership with Australian retail giant Coles Group.

Shares in Ocado have risen in the City today. Photo:  Jonathan Brady/PA Wire
Shares in Ocado have risen in the City today. Photo: Jonathan Brady/PA Wire

Shares in Ocado lifted more than 5% as the group said it has secured a contract to use its technology and software to develop Coles’ online grocery business in Australia.

Under the deal, they will run two automated warehouses - one in Sydney and one in Melbourne - which are expected to launch within four years.

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Coles - which is one of Australia’s largest retailers, with 818 supermarkets and more than 1,600 smaller stores and petrol station shops - will also shift its store-pick operations to Ocado’s smart platform in the same timeframe.

Coles said it will spend up to 150 million Australian dollars (£81 million) building the warehouses and on the upfront fees to Ocado, and added that it expects the deal to roughly double its home delivery capacity.

It marks the latest international deal success for Ocado, having already won contracts with US retailer Kroger, Swedish supermarket group ICA, France’s Groupe Casino and Sobeys in Canada.

In Britain, Ocado also announced last month that it had agreed a joint venture with Marks & Spencer, which will see the chain spend £750 million to buy half of Ocado’s UK retail business.

Retailers are keen to use its cutting-edge technology, which includes robots in warehouses, to help them meet the increasing challenge of online demand and competition.