Sobeys joins online-delivery battle
CEO says deal with U.K. group will offer ‘the biggest selection, freshest products’ on the planet
LONDON— Sobeys Inc. is the latest Canadian grocer to wade into e-commerce after last year’s arrival of Amazon into the nation’s competitive grocery industry forced incumbents to improve their online offerings.
Amazon’s $13.7-billion (U.S.) acquisition of Whole Foods Market, including its13 Canadian locations, led to speculation Canada’s grocers would have to step up on delivery offerings as the tech titan may expand its Amazon Fresh delivery service north of the border.
“We want to be the other player,” Sobeys spokesperson Cynthia Thomspon said, “the grocer that is competing with them head on.”
Sobeys and Ocado Group Plc announced Monday that they have signed a partnership deal for the British company to help build the grocer’s online shopping business, which they expect to launch in the Greater Toronto Area in about two years.
The long wait is equal to the amount of time it will take the two to build a customer fulfilment centre in the GTA. A video of a similar Ocado facility in Andover, England, shows a facility spanning nearly 21,000 square metres with robots rolling over a grid to pick and pack customer orders in about five minutes.
Ocado Group has licensed its grocery-delivery technology to Sobeys as the U.K. online retailer’s five-year efforts to offer its services to supermarkets build momentum.
Sobeys will use Ocado’s technology to create an e-commerce platform and to run an automated warehouse and a fleet of delivery vans. Sobeys will gain exclusive rights to the system in Canada and will pay an undisclosed fee upfront, the Hatfield, Englandbased company said in a statement Monday.
The deal follows a licensing agreement with France’s Casino Guichard Perrachon SA, bolstering prospects for Ocado’s technology. The company had spent at least four years hunting for a large international partner.
With deals now signed on both sides of the Atlantic, Ocado is taking significant steps toward becoming the global technology licensing company that chief executive officer Tim Steiner envisaged years ago. The Casino agreement helped the U.K. company reach an agreement with Sobeys, Ocado chief financial officer Duncan Tatton-Brown said on a call with reporters. The latest deal could raise Ocado’s profile in the lucrative U.S. market, which the company has long targeted.
Ocado’s services are in demand because storing and delivering groceries is more complex than selling books or video games. Food needs to be stored and delivered at the right temperature to ensure it doesn’t spoil. Ocado’s software helps trucks take the best route, so that deliveries arrive at the customer’s door within a one-hour window.
“Sobeys intends to play to win in Canadian online grocery shopping” and the deal will offer consumers “the biggest selection, freshest products and most reliable delivery available anywhere on the planet,” Sobeys chief executive officer Michael Medline said in the statement.