The market value of online grocery retailer Ocado has declined significantly following Kroger’s announcement that it will close three warehouses utilizing Ocado’s automated technology. Kroger, the fourth largest retailer in the US, had partnered with Ocado in 2018, signing a deal for the construction of 20 automated customer fulfillment centers. At present, eight of these centers are operational, with two additional sites planned for next year. This collaboration was seen as a key part of Ocado’s strategy to expand its grocery delivery technology overseas.
Kroger’s announcement, made on Tuesday, indicated that facilities in Frederick, Maryland; Pleasant Prairie, Wisconsin; and Groveland, Florida, will cease operations in January. As a result, Ocado’s shares fell over 17%, reducing the company’s market capitalization by approximately £350 million.
In its statement, Kroger mentioned that it had identified ways to enhance its fulfillment network. The retailer is shifting towards a hybrid model that combines traditional automation with store-based solutions in areas of high demand. Kroger has recently broadened its partnerships with delivery services such as DoorDash, Instacart, and Uber Eats, which use smaller vehicles to deliver goods.
In response to the warehouse closures, Ocado expects to receive compensation exceeding $250 million related to the early termination of the contracts, though it anticipates a $50 million loss in fee revenue by the end of the financial year in December 2026. Despite the current challenges, Ocado stated its intention to support Kroger in optimizing operations and remains optimistic about future growth opportunities in the US market.
Source: https://www.theguardian.com/business/2025/nov/18/ocado-shares-drop-after-us-partner-announces-warehouse-closures-kroger