Kroger invests in UK firm Ocado to boost digital business

In line with the trend of grocery and retail industry slowly picking up with automation to keep Amazon (AMZN) competition at bay, Kroger (KR) now hopes to achieve the same by striking a major deal with UK retail giant Ocado.

Under this partnership, Kroger will incorporate Ocado’s technology into its grocery and food distribution business, besides keeping 5% ownership in the company that is listed on the London Stock Exchange.

Kroger is also working with Ocado to pick a couple of sites in the US to set up its completely automated warehouses for this year. Within three years, the companies hope to set up over a dozen automated warehouse facilities, as well as enhance the management of its current warehouse operations and logistics.

This deal will help Kroger battle it out with Amazon, which is ruling the grocery delivery market through its purchase of Whole Foods, besides Walmart’s (WMT) digital deals.

Ocado is a company that is working on several projects based on robotics and has seen a surge in share price after the deal was announced. The company has struck similar other tech deals in France and Sweden in the past few months.

Ocado CEO Tim Steiner said in a statement, “As we work through the terms of the services agreement with Kroger in the coming months, we will be preparing the business for a transformative relationship, which will reshape the food retailing industry in the US in the years to come.”