Ocado signs technology deal with France's Groupe Casino supermarket

First step for Ocado in shift from pure-play online supermarket to technology supplier

Online supermarket group Ocado has finally signed its first overseas technology customer - French supermarket chain Groupe Casino.

The chain, whose subsidiaries include Géant Casino, Casino Supermarchés, Hyper Casino and Monoprix in France, as well as chains in Brazil, Argentina and Uruguay - will use Ocado's ecommernce platform, delivery software and warehouse robotics technology to develop its own online offerings to customers in France.

Oacdo CEO Tim Steiner said that he expected the deal to be the first of many, although the company has been pushing technology deals for many years now, only picking up Morrisons in the UK as a customer - until now.

The two companies will initially build a highly automated Ocado-style customer-fulfilment centre based on Groupe Casino's upmarket Monoprix band to serve the Paris region, as well as the Normandy and Hauts de France regions.

"This agreement is a major leap in terms of quality: 50,000 food items will be offered in the first stage to customers in the Greater Paris area with precise and speedy delivery at home and through a platform which makes it achievable to do this profitably," said Groupe Casino CEO Jean-Charles Naouri.

The new fulfilment centre will take about two years to complete and will be capable of handling more than 3.6 million orders every year.

However, the company intends to focus on click-and-collect, rather than the full home delivery that Ocado and Morrisons offer in the UK.

In interviews with Computing, technology director Paul Clarke has suggested that Ocado is offering exclusive technology deals with major supermarket chains that will make them the only ones in a particular country or geographic region allowed to use the Ocado technology.

The company has been working on a number of deals on that basis. Last year, it was rumoured that Ocado was on the verge of signing a deal for the Ocado Smart Platform with US supermarket chain Publix. However, nothing concrete emerged from those rumours.

Most city analysts were positive about the deal. "The deal makes a huge amount of sense given Monoprix's stature and premium offer in Paris, where there's a clear appetite for home delivery," suggested TCC Global analyst Bryan Roberts in an interview with Bloomberg.

However, Bernstein analysts claimed that Ocado needed to announce a lot more deals to justify its current high share price. "Justifying the Ocado share price requires one big deal per year for the foreseeable future and we don't believe there is sufficient deal potential for this," Bernstein claimed in a research note.