(Bloomberg) — Online grocery services provider Ocado Group Plc and Casino Guichard-Perrachon SA in France have created a logistics joint venture to help other retailers in France sell their goods online.
In a significant expansion of their existing partnership, the two companies signed a preliminary agreement where the duo will provide logistics services, including project management and operations support in the construction and running of the warehouses needed for the fulfillment of online orders. Ocado will also offer the robotic software program it uses to run highly-automated warehouses.
There isn’t expected to be any initial capital cost associated with the joint venture to either Ocado, which recently revealed a sharp increase in capital expenditure this year, or Casino, according to the statement.
Shares in Ocado were up 2.6% in early trading in London Thursday. Casino’s shares in Paris were little changed.
Ocado and Casino first started working together in about 2017 with the British company providing its software and logistics know-how to help the French grocer grow its online business. It was one of the first major international licensing deals for Ocado, which hopes to become the world’s premier provider of grocery logistics services.
Casino said Thursday it is extending that partnership further and will use Ocado’s software to run its Monoprix in-store fulfillment operation. Ocado will also integrate the Cdiscount unit’s Octopia online platform onto its systems.
The two companies said they see “significant and growing demand” for online grocery across the French market. Tim Steiner, Ocado’s chief executive officer, said the French grocery market has reached an “inflection point” as consumers look for efficient ways to buy their food. Casino’s rival Carrefour SA has been boosting its e-commerce capabilities, with 3 billion euros ($3.4 billion) of digital investments planned through 2026.
Last month Casino warned that French retail profit declined last year, with analysts turning their focus back to the multiple challenges confronting the company, including high leverage and declining market share.
In France speculation is building of retail mergers, especially after elections are held this spring. Carrefour has been the subject of takeover speculation in recent press reports. Rival Auchan held talks with private equity funds about teaming up on a renewed bid for Carrefour, Bloomberg News reported last month.
(Updates with details from statement from third paragraph and shares in fourth paragraph)
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