Ocado’s stock has seen a significant fluctuation since its listing at 180p 15 years ago, peaking at £29 during the Covid lockdowns in 2020 before returning to the same initial price. The company’s partnership with the US supermarket chain Kroger, formed in 2018 to introduce Ocado’s technology into the American market, has come under scrutiny. Recently, Kroger announced the closure of three out of its eight warehouses utilizing Ocado’s technology, along with an intention to explore partnerships with alternative delivery services such as DoorDash and Instacart.
This situation points to ongoing strains in the partnership, raising questions about the effectiveness of Ocado’s automated systems. While the company’s business model is capital-intensive, focusing on state-of-the-art robotics and automated warehouses, alternative delivery methods tend to rely on quicker, less costly operations, such as dispatching items from existing stores.
Analysts note that Kroger’s review suggests Ocado’s high-tech model may only be viable in densely populated areas, indicating limitations to its scalability. Despite these challenges, Ocado maintains that it anticipates significant growth in the US market. The company will receive $250 million in compensation from the warehouse closures, although many observers believe a strong endorsement from Kroger would have provided more favorable financial backing.
Ocado also operates a joint venture with Marks & Spencer in the UK, which is experiencing growth in grocery sales. The company’s objective has shifted towards establishing itself as a technology provider, aiming to generate sustainable revenues from licensing its technology globally. However, the recent setbacks with Kroger prompt critical reflection on whether Ocado’s engineering can be widely adopted without prohibitive costs. The future of its expansion strategy in the US and beyond remains uncertain as this situation evolves.
Source: https://www.theguardian.com/business/nils-pratley-on-finance/2025/nov/18/ocado-share-price-back-where-it-started-fancy-robots