Sobey Ocado

Sobeys is Canada’s second largest food retailer, and now it is trying to expand as well into the online grocery business. For this, it is teaming up with Britain’s eCommerce giant, Ocado as it expands even further.

Sobeys store front
Image Source (CNW Group/Sobeys Inc.)

This team-up is through Ocado’s proprietary technology. Ocado has been trying to promote it to international supermarkets, and now Sobeys is taking the leap by getting involved with it. With this deal, Ocado’s shares have gone up by 12 percent. This coming from another recent deal it had last November with French supermarket Group Casino.

Online Grocery Coming To Canada

The aim of the deal is to create a customer fulfillment center in Toronto as well in other urban areas in Canada. The first few years will likely be difficult, as Ocado expects neutral earnings in the first financial year it will operate. More capital spending of up to $20.8 million is expected within the next few years of operation.

“The North American online grocery market is growing, there are a lot of buyers there, and we definitely see an opportunity,” Duncan Tatton-Brown, Ocado, Financial Chief Financial Officer

This trend is already being seen as other groceries such as Walmart are expanding on its online presence in the wake of Amazon’s own move towards the online grocery industry.

The two companies would be creating a website and mobile service, both said in a joint statement. Mobile shopping is also growing, and many sites now have mobile versions of it to make it easier for mobile users to navigate. Ocado’s technology would be used to help Sobeys’ delivery system and improve customer service.

As competition gets up in the online grocery industry, more supermarket retailers will look into online shopping as an addition to their services. Would this move further benefit the grocery business as a whole? Comment in the section below.

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