Ocado signs new deal in Australia with supermarket chain Coles

Ocado Smart Platform to go live in Australia's Coles in the next four years, with warehouses in Sydney and Melbourne

Ocado has brushed off the February warehouse fire that destroyed one of its facilities in Andover with a new deal in Australia with supermarket chain Coles.

The deal will be exclusive to Australia, meaning that Ocado won't be cutting any further online retailing infrastructure deals with any other Australian retailers.

The deal will include both warehouse facilities using Ocado's robotic technology, as well as the software platform. The aim is to better enable Coles to receive and fulfil online orders targeted to Australia's main metropolitan centres.

Coles will pay Ocado upfront fees upon signing and during the development phase, then ongoing fees linked to both sales achieved and installed capacity

Ocado will be implementing warehouses to serve the cities of Sydney and Melbourne, while also providing its proprietary store-pick software to enable Coles' customers in less densely populated areas to benefit from online shopping and delivery from nearby Coles supermarkets.

Ocado will provide a comprehensive and customised suite of support and engineering services to power Coles' ecommerce operations, the company claimed in a statement to the London Stock Exchange.

Steven Cain, CEO of Coles Group, described Ocado as "the best in the world", adding that the deal would "make life easier for Coles' customers here in Australia".

He continued: "Ocado's ongoing investment and retail partnerships around the world will help us continue to improve our offer into the future".

Luke Jensen, CEO of Ocado Solutions, claimed that Coles had "chosen the Ocado Smart Platform to take them to the next level".

He continued: "Our flexible, scalable and modular solution will help them bring new levels of convenience, choice and value to Australian consumers. The Australian market is changing as consumer needs evolve and our platform will enable Coles to lead this transformation in a profitable and sustainable way."

Coles will pay Ocado upfront fees upon signing and during the development phase, then ongoing fees linked to both sales achieved and installed capacity within the customer fulfilment centres [warehouses] and service criteria.

However, the impact of the deal will be negative in the current financial year as no cash fees will be recognised until operations commence, Ocado's statement stressed.

Coles, like Homebase in the UK, is currently recovering from a stint under the ownership of Australian conglomerate Wesfarmers. It was acquired by Wesfarmers in 2007, but spun-out in November 2018.

It enjoyed revenues of AU$39.29 billion (£21.16bn) in 2018, making it about the same size in revenue terms as Asda in the UK.

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